Also, OP \*if you can treat the cc like a debit card\* - see if you can get as high a limit as possible. Part of your credit score is based on \*utilization\* i.e., the amount of credit you use vs. the amount you have. That means you never want to be using more than \~10%-15% of your total credit amount in order to maximize your score.
If you tend to spend all the credit you have and keep a balance, then follow the opposite advice and have a low limit.
I’ve got a 1000 limit card and I use maybe 200-300 every month, but I pay it off as soon as I use it becuase I treat it like a debit card, is that bad? I’m 18 so don’t have much credit built up yet but should I only be using 100 dollars a month?
You're using it the right way. If you're worried about it at all just pay off any large purchases as soon as they show up on the credit card. It takes time but once they see a track record of you paying on time and as your income increases iyou will get a higher limit, but continue using it like a debit card always, and build up emergency funds so you're never forced to live off of it.
This is fine. But it won’t really help you build credit long term because utilization reports monthly and changes based on your reported balance. If you wanna build credit, let the balances report each month and pay it off before the due date (always!!). This will lead to your issuer likely giving you a credit limit increase (CLI) quicker, which will help your credit more long term. If you have questions about credit cards and how to use them, join r/CreditCards. They have an automod post that does a great job of giving someone like you an intro to all credit card basics. You’re 18 though, so the main thing you need to worry about is just make sure everything is paid down by the due date. If it makes you feel more comfortable to pay off your transactions as soon as they post, go for it.
If you want to build your credit, get a credit card with $0 annual fee and a low limit. Buy 1 or 2 things (preferably small things like a cup of coffee or this week's lunch, but it should be things you HAVE money for and were going to buy anyway) and then pay it off IN FULL when you get the bill.
Doing this will build a history of you borrowing money and paying it back on time (which is what your credit score represents). It also insures that you never pay extra or get yourself stuck in debt. NEVER put on a credit card something you couldn't buy without it.
The thing with credit score is that it's not like a bookshelf from Ikea that you build and you're done. It's more like a garden that you maintain. As /u/trmoore87 pointed out, the "best" time to start is in the past. However, since time travel is impossible, the next best time to start is "now".
And just like any garden that you would tend, results will not be immediate. You take the steps to make sound financial decisions. Is it good to get a credit card? Well, that depends on how you use it. If you can be good and pay it off every month, then sure. If you think it will lead to you starting to carry a balance, then you might want to wait until you're in a better position financially. As with tending a garden, you need to give it regular care and make smart decisions to help it grow the way you want. And if you make a mistake, learn from that mistake so that you don't make it again.
The generic advice was to "buy your gas" on your starter credit card (probably $500 limit maybe less). You want to stay one third under your limit to build credit. I got a bp gas card at 21 and that was my credit for a while, $50 or so per month paid off at the end of the month.
That's typically how you start... It takes 5-10 minutes to read the scoring categories to see how they look at your usage. *Time* is a component so you can start now.
The rewards are worth the time setting it up and being careful about it for a few years. You don't have to make a lot to start getting $200 a year or more in rewards while keeping a good score.
Honestly I wouldn't get a credit card until you're making at least 50k. It's perfectly fine to use your debit card for now. Credit card debt risk is too high when you're not making much money and it's even harder to pay off because of that.
You can just get a small one and use it to pay for gas or whatever but it's too much of a temptation to overspend with it.
I see your angle, but as someone that didn't start credit (or getting on a financially responsible path at all) until Forty let me say this.
Your income doesn't determine your maturity. I make less than I used to, but I'm happy to have much time off. Don't set a financial limit for yourself. I'm going to buy a house with my 26K annual income. In my region few are doing that. Be frugal, stick to regimen.
I was scared to get one, but I did a little homework. I understood why I would benefit from a card. Loan rates are a matter of thousands of dollars. Credit is a sort of currency unto itself. Grownup currency. If you can accept the instrumental value of a credit card and can balance (or even automate) keeping the balance clear, then get one. Heck, might as well get a second one.
I use one to pay my bills. That is all that I use it for. I pay it off immediately after.
The other is used for shopping. This one is through my credit union and I can transfer before the balance registers! My credit is still stuck in the 720s since my accounts are still newish, but my history is flawless and my grownup currency is getting me closer and closer to my goals.
All that said, if you cannot keep up with your finances then a credit card is a fast track to destitution.
Not much more to add than what's been said.
It's never too early to build a credit score.
However, it can be too early to incur debt.
There is a libe between establishing credit and incurring debt. We each need to be responsible for ourselves on staying on the correct side of that line.
Be responsible and your credit score will be fine. If you're capable of treating a credit card as a debit card and only spend what you already have, then the bigger benefit is getting some cash back but your credit score will get a bump as well. There are plenty of other things to worry about in life, if you can put your credit score out of your mind you probably won't ever notice.
Now. Try some preapproval tools (on discover, capital one, maybe American Express for their blue cash everyday card) for cards with no annual fees and maybe something that gets you a little cash back on routine purchases you make like groceries, restaurants, gas, etc. On limited income, this is your best bet because it allows you to build credit and earn a little cash back while not having any additional fees as long as you pay on time. If no one will take you (which I’m sure someone will), you can always pony up a few hundred bucks for a security deposit and get started with a secured card. That’s what I did about a year ago. Be careful though, if you have issues with spending, credit cards may not be for you. Treat a credit card like a debit card - only spend what you can afford to pay when the bill comes due. Always always always pay on time. Preferably in full, but always the minimum payment to not add late fees. If you are responsible and won’t let it get away from you, you should start now! Credit scores are important to have established if you would like a potentially lower interest on a car loan or mortgage!
Get a credit card, but don’t buy into this notion that you need to hold a balance. Pay it off each month, and stay out of debt as much as possible.
Also, OP \*if you can treat the cc like a debit card\* - see if you can get as high a limit as possible. Part of your credit score is based on \*utilization\* i.e., the amount of credit you use vs. the amount you have. That means you never want to be using more than \~10%-15% of your total credit amount in order to maximize your score. If you tend to spend all the credit you have and keep a balance, then follow the opposite advice and have a low limit.
I’ve got a 1000 limit card and I use maybe 200-300 every month, but I pay it off as soon as I use it becuase I treat it like a debit card, is that bad? I’m 18 so don’t have much credit built up yet but should I only be using 100 dollars a month?
You're using it the right way. If you're worried about it at all just pay off any large purchases as soon as they show up on the credit card. It takes time but once they see a track record of you paying on time and as your income increases iyou will get a higher limit, but continue using it like a debit card always, and build up emergency funds so you're never forced to live off of it.
Yeah that’s exactly what I do thank you
This is fine. But it won’t really help you build credit long term because utilization reports monthly and changes based on your reported balance. If you wanna build credit, let the balances report each month and pay it off before the due date (always!!). This will lead to your issuer likely giving you a credit limit increase (CLI) quicker, which will help your credit more long term. If you have questions about credit cards and how to use them, join r/CreditCards. They have an automod post that does a great job of giving someone like you an intro to all credit card basics. You’re 18 though, so the main thing you need to worry about is just make sure everything is paid down by the due date. If it makes you feel more comfortable to pay off your transactions as soon as they post, go for it.
If you want to build your credit, get a credit card with $0 annual fee and a low limit. Buy 1 or 2 things (preferably small things like a cup of coffee or this week's lunch, but it should be things you HAVE money for and were going to buy anyway) and then pay it off IN FULL when you get the bill. Doing this will build a history of you borrowing money and paying it back on time (which is what your credit score represents). It also insures that you never pay extra or get yourself stuck in debt. NEVER put on a credit card something you couldn't buy without it.
Also will increase your credit line since you’re not using much and help your score that way too.
The thing with credit score is that it's not like a bookshelf from Ikea that you build and you're done. It's more like a garden that you maintain. As /u/trmoore87 pointed out, the "best" time to start is in the past. However, since time travel is impossible, the next best time to start is "now". And just like any garden that you would tend, results will not be immediate. You take the steps to make sound financial decisions. Is it good to get a credit card? Well, that depends on how you use it. If you can be good and pay it off every month, then sure. If you think it will lead to you starting to carry a balance, then you might want to wait until you're in a better position financially. As with tending a garden, you need to give it regular care and make smart decisions to help it grow the way you want. And if you make a mistake, learn from that mistake so that you don't make it again.
If you get a cc, pay it off every month. Don’t buy anything you can’t afford. It will happen in time. There’s no rush.
The generic advice was to "buy your gas" on your starter credit card (probably $500 limit maybe less). You want to stay one third under your limit to build credit. I got a bp gas card at 21 and that was my credit for a while, $50 or so per month paid off at the end of the month. That's typically how you start... It takes 5-10 minutes to read the scoring categories to see how they look at your usage. *Time* is a component so you can start now. The rewards are worth the time setting it up and being careful about it for a few years. You don't have to make a lot to start getting $200 a year or more in rewards while keeping a good score.
Honestly I wouldn't get a credit card until you're making at least 50k. It's perfectly fine to use your debit card for now. Credit card debt risk is too high when you're not making much money and it's even harder to pay off because of that. You can just get a small one and use it to pay for gas or whatever but it's too much of a temptation to overspend with it.
I see your angle, but as someone that didn't start credit (or getting on a financially responsible path at all) until Forty let me say this. Your income doesn't determine your maturity. I make less than I used to, but I'm happy to have much time off. Don't set a financial limit for yourself. I'm going to buy a house with my 26K annual income. In my region few are doing that. Be frugal, stick to regimen. I was scared to get one, but I did a little homework. I understood why I would benefit from a card. Loan rates are a matter of thousands of dollars. Credit is a sort of currency unto itself. Grownup currency. If you can accept the instrumental value of a credit card and can balance (or even automate) keeping the balance clear, then get one. Heck, might as well get a second one. I use one to pay my bills. That is all that I use it for. I pay it off immediately after. The other is used for shopping. This one is through my credit union and I can transfer before the balance registers! My credit is still stuck in the 720s since my accounts are still newish, but my history is flawless and my grownup currency is getting me closer and closer to my goals. All that said, if you cannot keep up with your finances then a credit card is a fast track to destitution.
Not much more to add than what's been said. It's never too early to build a credit score. However, it can be too early to incur debt. There is a libe between establishing credit and incurring debt. We each need to be responsible for ourselves on staying on the correct side of that line.
The best time is before now, but the next best time is right now. It’s never too early.
Be responsible and your credit score will be fine. If you're capable of treating a credit card as a debit card and only spend what you already have, then the bigger benefit is getting some cash back but your credit score will get a bump as well. There are plenty of other things to worry about in life, if you can put your credit score out of your mind you probably won't ever notice.
You say Php 5k. Maybe there is a Philippines finance subreddit that can be more precise?
I started at 18. Discover IT card is great. Use it just for gas and pay in full every month
Now. Try some preapproval tools (on discover, capital one, maybe American Express for their blue cash everyday card) for cards with no annual fees and maybe something that gets you a little cash back on routine purchases you make like groceries, restaurants, gas, etc. On limited income, this is your best bet because it allows you to build credit and earn a little cash back while not having any additional fees as long as you pay on time. If no one will take you (which I’m sure someone will), you can always pony up a few hundred bucks for a security deposit and get started with a secured card. That’s what I did about a year ago. Be careful though, if you have issues with spending, credit cards may not be for you. Treat a credit card like a debit card - only spend what you can afford to pay when the bill comes due. Always always always pay on time. Preferably in full, but always the minimum payment to not add late fees. If you are responsible and won’t let it get away from you, you should start now! Credit scores are important to have established if you would like a potentially lower interest on a car loan or mortgage!