What does building credit history mean? Is it imp for students?

[nssnick]

Its been 15 days for me here and I have heard many people talk about building credit history. Now, Whats that? Can anyone explain why it is important to do so? Is it important for students?

Looking for an exact and confirmed answer from an experienced person?

 

[Pippin]

An example would be having a credit card. You may start with a prepaid card in some cases. When you have had it for a while the bank then gives you a credit limit. So now you can charge and pay off your credit card monthly. Show that you are paying off your debt and having employment and they may increase your credit limit. This is how you build a credit history. Same goes for buying a car and getting a loan. The better your credit history the easier it will be to borrow the money you need.

 

[mead]

Its been 15 days for me here and I have heard many people talk about building credit history. Now, Whats that? Can anyone explain why it is important to do so? Is it important for students?

Looking for an exact and confirmed answer from an experienced person?

credit history is very important if u want to settle in canada. Lets say after a few years u want to buy a house in canada to get a mortgage they will look at ur credit history and credit score. Credit history is a record of ur past paying bills , past borrowing , not paying bills etc. negative credit history means u havent paid ur bills or ur credit card bills etc.
example is: u get a cell phone contract and use it for few months and u dont pay its bills then the cell phone company reports ur not paying a bill to the credit burrow which will put it on ur credit history. so thus building ur credit history in a negative way. Once an unpaid bill goes on ur credit history ur credit score goes down and that makes it difficult for u to get future credit/mortgage. Credit history check is done at various places like if u want to buy a new car , if u want to rent a good place, u want to buy a house , u want to apply for a credit card etc. Negative credit history makes it difficult for u to do those things. from credit history a company can identify if ur worthy of giving credit.

 

[user828]

It very easy to get swayed and rack up debt, but be responsible
You will get credit card offers for students - and best is to have 10% utilization

So for eg.,

You have 3 credit cards with limits of $500, $1000, $1300 so total is = $2800
Now usage per month should ideally be between 280-400 dollars and pay of balance
This will keep your score growing and growing and when you are outta college etc, get into real life - you will have an awesome score and will have no issues getting house loan, car loan etc

 

[Pippin]

Using a credit card for your daily purchases makes good sense as long as you do not live beyond your means. Interest charges on credit cards is out of this world.

 

[nssnick]

Thanks all for your replies ...but tell me in respect to how important holding a credit card and building a history for student is important? I was offered a credit card but I declined to take it because of fear of high interest rates as Debit card would be enough for me to settle down my purchases as of now. Is it important with respect to "getting settled here" ?

 

[user828]

If you don't have a credit history, you don't have a life - its on par of having a valid visa. It will help you a lot when it comes to getting mortgage, cars, even rental, some jobs requires it too
For those who don't get a credit card, can start with a mall credit card etc, but best is to get one and keep the utilization under 15% and pay of balance
Frankly, see it as a way of building credit and don't buy something which you can't afford via a debit card ( ie not beyond your means ), but use it and then pay of via debit card
If you keep it this way, in few years you would have a 800+ score and see how you are respected from the banks

 

[mead]

Thanks all for your replies ...but tell me in respect to how important holding a credit card and building a history for student is important? I was offered a credit card but I declined to take it because of fear of high interest rates as Debit card would be enough for me to settle down my purchases as of now. Is it important with respect to "getting settled here" ?

u should take a credit card and build ur credit history .....u may not need it as a student but long term it will help...also u dont get interest rates if u pay all the balance at the end of the pay period (mostly monthly). also make sure the card is no fees card.

 

[hell911]

so i should stop using debit card, and use credit card from now on?

how is the interest rate thing in credit card?

 

[user828]

so i should stop using debit card, and use credit card from now on?

how is the interest rate thing in credit card?

It only comes up after certain date, if you pay the balance off then there is no interest rate. So sat you spend $250, and your statement date is Aug 5, you will have 20 days to pay of the whole balance w/o interest or after that you make min payment of $10 or whatever which will include interest but the balance remains ie.,e $243 etc and this is something you want to avoid. If you utilize 10-15% of you entire credit ( all credit cards ),. your credit score rises ( FICO Score )
You need to use the card and pay it off, don't worry about interest rates on cards etc - they will come with better cards-my advice is merely to build history. Most people in North America are under heavy debt coz they keep using these cards with $10 min payment, thats all they see and then become used to it and eventually apply for more cards to pay off the 1st one ( called fishing ) but your balance remains, you look like high risk
Credit Card is technically a scary scam BUT it's the best tool to build credit so if you are a responsible person who knows his limits - use it and then pay if off, check your credit score once in a while - over a period od time, your score will grow and banks will see you as a responsible consumer

http://www.investopedia.com/articles/pf/08/establish-credit-history.asp

Building a Good Credit History Should Be Free
One somewhat poor piece of advice often given to those with no credit history is to take out a small loan from the bank and pay it back on time. This is a bad idea because it is a waste of money. You'll have to pay interest on that loan, and no matter how good the interest rate is, why pay to borrow money that you don't even need? It isn't necessary to pay interest to establish good credit, and the only debt you should incur to establish credit is the very temporary kind that occurs between the time you charge a purchase to a credit card and a couple of weeks later when you pay the bill in full.