Bank Loan question-Should I?

[Mitchum]

Well Ive been told by a few people that I should start building my credit while I still live at home and have expendable income. I talked with my parents and they are willing to co-sign a 1000-2000 loan for me.

My only question is(as well as there's) is if they sign for me-will that just build up their credit score? or will I start my own-despite not owning my own credit card( im not 18, I cant get my own)

I'm not looking for a "your 17-you cant handle payments on a $2000 loan" remarks. Id appreciate any insight on this. I'm graduated from high school, have been working the same full time job for over a year now and am a ticketed apprentice-the loan payments aren't an issue currently.
Im looking to buy a house mid way through my second year so im starting to think about a mortgage and it seems ideal to build my credit now.

any advice from the many wise people would be great

Thanks

Mitchell

[Eikon]

Get the loan. Keep it out for at least 12 months.
The credit line will show up on your credit report as well as your parents.

As soon as you're 18 get a credit card as well. Put your gas on it and pay it back every month.

Get another loan from another bank if you can. You'd like to have 3 credit lines with at least 12 months history to really have a chance at a decent credit score.

[dre1507]

well, i'm not much help, because i'm not sure. however, i do think that with the loan being in your parents' names it'll probably go towards their credit. You could take unsubsidized financial aid loans since you're going to college and just pay them off. That's one way to get started. There's also credit cards among other ways to build credit.

[Urabus GodofTraction]

Pretty cut and dry... if it's not for a house, don't get a loan.

[Eikon]

the OP is asking for accurate advice.. normally I wouldn't call people out for having a different opinion, but in this case, both of the other people who've posted have given poor information.

As I stated in my first post, a co-signed bank loan will result in a trade line on the credit report for both the kid and the parents.

Next, to recommend taking out no loans other than for a mortgage is not sound advice... The problem with it is that if you have no credit, you can't get a mortgage.
So, get a few small credit accounts (credit cards, loans, etc..) and build some credit. Don't leave unnecessary balances outstanding and don't waste money on interest. But build some credit history so that you can build a decent credit score so that when you are ready, you can buy a house.

[Mr1der]

^^ can't really argue.

BUT a little credit will help....

I'm not sure how much of an impact you'll see with a cosigner however.

I'm also an awful person to ask in regard to it too.

[fame_s13]

u can get chase student credit card..thats wat i had when i was 17!

[krimsonviper]

Hmmm... Do it. It should build both of yours and parents' credit lines. You should be able to put your car insurance in your name as well, but I can't really remember how old I was when I bought my first car and had my own insurance.

Remember, don't bite more than you can chew.

[ADDirishboy]

It's always a good idea to start building credit a little at a time. I was paying for my own car insurance and cell phone at 16, so that started things off.

The BEST advice that I can give you is to not take out more than you can pay back. This is really easy to do with a credit card. I was 18. It had a $1200 credit limit. The days before I got it I kept telling myself that I would just buy gas and other small purchases with it and pay it all off every month. 2 days after I got it, it was maxed. Yea. DO NOT do that. I was paying that off for a LONG time.

Be careful with loans and credit cards. If you're responsible enough to not do what I did, I say go for it. If there is even an inkling that you may do what I did, I would say don't. Because you will.

[dre1507]

oh reading owns me. didn't see the "co-" part of that statement. but geez to say my entire paragraph of advice was poor based on one mistake is just too harsh. *slumps in corner with feelings hurt*. hehe. My only credit problem is i don't have enough history.

[MaximA32]

Listen to Eikon. He's been in the mortgage/loan industry for a long time now, he knows what's up. I need to start taking some of his advice.

What are ticketed in?

[Eikon]

I didn't say your whole post was poor advice. I just pointed out the part about cosigned loans going on the parents credit only was incorrect. Sorry if I came across too harsh. Just trying to ensure that the OP gets correct information.

[dre1507]

lol ADD. maxed credit card in two days....you beat me by one day less. lol.

[dre1507]

I didn't say your whole post was poor advice. I just pointed out the part about cosigned loans going on the parents credit only was incorrect. Sorry if I came across too harsh. Just trying to ensure that the OP gets correct information.

just yanking your chain (no innuendo-ish pun or whatever intended, lol). i know all too well how easy it is to make mistakes by not getting not-so-correct info, so i respect pointing out my mistake for the OP's sake.

[krimsonviper]

Oh, and do NOT pay the minimum if you don't have to. Especially on high interest rates, because you'll be paying that back in forever.

[nissangirl74]

Paying your balances in full every month looks really good to loan officers. Do NOT get any credit card that charges exorbitant Annual fees, activation fees, variable rates, or anything like that. READ THE FINE PRINT. You're a bit young right now to qualify for a really good card (offers rewards, no annual fee, low and fixed interest rate) but as soon as you do, get one. Charge everything that you can to it and pay it off completely every month. You can get lots of cool stuff for free or save up and travel for free. Rewards cards are the bomb. Good luck on building your financial future. Just remember to be responsible and if you need your parents to help you manage your money, ask for help. The only thing worse than no credit is bad credit which is really hard to fix.

Edit: Be careful about acquiring a collateral based loan. Never offer up something that you can't live without.

[Mitchum]

Ive been paying my own insurance since the first day I started driving- Ive also only had a cellphone as long as I could afford it- My parents made me work for what I have and I think its paying off now that I'm getting an early bump start on life.

I appreciate all the advice with my question- Ill be going into the bank sometime shortly to take out a $1500 loan(c'mon new engine!)- but I think that will be a safe place to start until im 18 and can apply for a credit card. As to my knowledge, living in Canada- there isn't any-sort of Chase Card available to me.

And to answer the question- I'm an Automotive Service Technician Apprentice- so im a mechanic haha AST just sounds cooler because of the word "Technician".

Thanks everyone for the advice

[Murdered_T]

no, your dumb.

[D1SR240]

You're a bit young right now to qualify for a really good card (offers rewards, no annual fee, low and fixed interest rate) but as soon as you do, get one. Charge everything that you can to it and pay it off completely every month. You can get lots of cool stuff for free or save up and travel for free. Rewards cards are the bomb.

Rewards cards are great. I just ordered some really nice Bose headphones from my credit card rewards program. However, be careful when you start charging everything you can to your CC. Part of what goes into your credit score is how much debt you use in regards to how much debt you have available. Maxing out this ratio is not a good thing, even if you're paying off the balance entirely every single month. Don't quite me on this, but I believe a good ratio to stick to if you want to increase your credit score is about 33%. So, if you have a $1,000 limit, I would charge around $300-400 a month to the card, and pay it off entirely every time. Just something to keep in mind.

[hbpignosePA]

never a bad idea to build credit.

my sophomore year i took out a personal loan to establish credit. two year loan i paid off in 15 months. that was around 5k. this past year i ended up getting a credit line

its awesome with a 5k limit, and a looooow rate (something like 5.8 percent) i rarely have anything out on it, its if i come up short for tuition or books.

just dont bite off more than you can chew; i rarely put anything on credit, i just got a card a few months ago.... and i only got that for if i want to rent a car or hotel room for vacation.

to those that say dont take a loan if your not getting a house, is the worst advice ever. you need to build credit especially when the market is so crappy.

[Urabus GodofTraction]

to those that say dont take a loan if your not getting a house, is the worst advice ever. you need to build credit especially when the market is so crappy.

No, you don't. Worshiping your FICO score is like a fat chick gorging herself before her first Weight Watcher's meeting so she'll be able to lose more weight... An "I love debt score," if you will.

FICO matters most for automatic underwriting, in which information about you is feed into the Mortgagetron 3000, and beep-boop-beep, you're approved!

Rebels like me with no loans and no cards (and yet, gasp, my score is above 700!) hunt for manual underwriting, in which a person, with, you know, a brain looks at you as more than a number and decides if you're approved. Worked for me, I'm qualified for WAY more house than I could comfortably afford (has anyone learned anything over the past few years?!).

But you'll probably just keep on in your rat race. You can send me a thank you letter in 50 years when I'm paying for your Social Security check so you can buy MD 20/20.

[PoorManQ45]

Only thing I'd suggest is getting a small loan on a used car or something useful. Maybe in the 3k - 5k range. 36months. Pay it off in 12. Easily done, should do wonders

[Jesda]

Car debt is the worst kind. A rapidly depreciating and often disposable asset that accumulates interest -- just say no.

I know the perils of debt from experience.

[PoorManQ45]

Car debt is the worst kind. A rapidly depreciating and often disposable asset that accumulates interest -- just say no.

I know the perils of debt from experience.

I'd say a used car wouldn't be too bad. Specifically something that has already taken a huge initial hit.

[BusyBadger]

no, your dumb.

It's "you're" not "your".

Ex: "If you're going to call someone dumb you should ensure that your grammar is correct."

[Eikon]

No, you don't. Worshiping your FICO score is like a fat chick gorging herself before her first Weight Watcher's meeting so she'll be able to lose more weight... An "I love debt score," if you will.

FICO matters most for automatic underwriting, in which information about you is feed into the Mortgagetron 3000, and beep-boop-beep, you're approved!

Rebels like me with no loans and no cards (and yet, gasp, my score is above 700!) hunt for manual underwriting, in which a person, with, you know, a brain looks at you as more than a number and decides if you're approved. Worked for me, I'm qualified for WAY more house than I could comfortably afford (has anyone learned anything over the past few years?!).

But you'll probably just keep on in your rat race. You can send me a thank you letter in 50 years when I'm paying for your Social Security check so you can buy MD 20/20.

Stop giving people advice on credit, because your advice is wrong.

If you have a credit score of 700, then you've had trade lines in the past. You cannot get a score without having credit at some point. You may not have any open lines right now, but you have had credit.

The OP is looking to build credit history so that he can buy a house someday. 3 years ago, I could have written him a mortgage under the FHA loan program, which could utilize manual underwriting with non-traditional credit sources to get him a loan. Today... that doesn't exist anymore. The mortgage industry has changed drastically over the last few years, and everything is fico minimum driven now.

Sorry to call you out on it, but I just can't ignore when people give bad advice on such an important topic.

[Urabus GodofTraction]

And you'd be wrong. No debt, no cards.

You're giving terrible life advice for the sake of credit scores. If the FHA has gone into hiding (still wouldn't explain why I'm able to be manually underwritten (underwrote?)), it will be back by the time he saves what he would be paying on a silly, useless loan for a good downpayment. Or, novel thought, pay cash for a house. With enough discipline, it would only take a similar amount of time compared to the time he'd have to wait to "build up his credit."

But like I said, carry on, rodents, in your rat race.

[Eikon]

Again, you are incorrect.. You cannot have a credit score if you've never had a credit account.
In the business, we call people with no credit score "ghosts". They have no credit history, and thus, no credit score. You can't get a numerical score unless you've had some history to build on.

Thank about it... A credit score is a numerical score of the strength of your credit history... if you have no credit history, you cannot get a score.

If you have a credit score, you will have some form of credit account/s on your history in the past 7 to 10 years. Student loans, credit cards, co-signed loans, etc..

The only possibility I can think of for manual underwriting today would be through a local credit union. Credit unions lend with their own funds, and thus, are not subject to national banking and underwriting guidelines. Certainly there are some smaller establishments who still lend money based on non-FICO score ideals. They may even have their own score-card developed in-house to rank borrowers on a "like FICO basis". But these are one-off examples and very very rare in today's lending environment.
If this is the case for you... good for you!.. Congrats.. but you've found a rare case. It would be like the OP asking how much an SR20 motorset costs and you saying $200 because you happened to find one ad on craigslist where the person was selling something they didn't know the value of.. The proper advice to give a random stranger is $2000 because that's the norm... If they happen to find a crazy good deal on their own.. good for them. But your example of being able to buy a house with no credit score is nearly an impossibility, so there is no sense giving that advice to another person.

As for your rodents and rat race snipes... Sounds like you need to buy a Prius and move to California and enjoy smelling your own farts. The rest of us live in the real world and would be wise to learn how to manage our lives according to how the world works..

Sure you could live your entire life with no credit accounts... and if a person can do that.. good for them. I suppose I could have moved into my parents basement with my wife and started my family and saved up my paychecks for 15 years to buy a house for cash.. but I'd rather pay a little more and have a better quality of life.

[Encryptshun]

Glad to know you paid cash for your copy of "How to Win Friends and Influence People", charlieo

[Repo Man]

OP, listen to Eikon's advice. It is sound. Charlieo is off in his own world, and if that works for him, great, but his "model" will not help you establish your credit. Apparently, if we do not all subscribe to his philosophy, we are rats. It also implies that if we know how to properly establish and manage our credit, we are somehow subservient to a ruling class foregoing our personal freedoms and independence.

Or some such s***...