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Hi there again! Serial's back with another question!
I have started my savings and set aside a nice little bit already. (No small amount of thanks to the Fools here who gave me advice on where to put it and what to look for!)
But, I still need to establish credit. I have none, absolutely none what-so-ever. My problem is, if I want to sign a lease or buy a car, I will need some! I would like to have at least a short credit history before I strike out on my own. I have had some people suggest student loans, but, I pay for almost all of my classes in financial aid! Whatever is left is a rather piddly amount indeed, and I have no other large expenses that would validate getting a loan, even if I could get my hands on one.

There are a lot of mixed feelings that I am getting about credit cards, some swear by them as useful and important, others think they should be burned upon sight.
Are there any other options for me? If a credit card is a good fit, what should I look for in my first one?
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Since you have savings, you may consider getting a secured card or a secured loan.

You promise to keep an amount, say $500, in a savings account, and the bank/credit union then gives you a card or an installment loan for the same amount. You pay it off in a timely manner, and you now have good credit.



Ishtar
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You promise to keep an amount, say $500, in a savings account, and the bank/credit union then gives you a card or an installment loan for the same amount. You pay it off in a timely manner, and you now have good credit.

Just to add to this advice, remember that you don't need to pay interest to establish credit, so I think getting a secured card that you use to charge your already-budgeted expenses for which you already have the cash in the bank and which you pay IN FULL every month is a great idea. This will establish your credit and not cost you anything.

You do not need to get a car loan to establish credit, and if you can save up a small amount and use that to pay cash for a used car, you will most likely come out ahead. If you cannot do that because you need a car to get to work before you have enough saved up, I would suggest keeping your car payments at a minimum. When the car is paid off, continue to put that same amount aside into a savings account, and when the car dies and it needs to be replaced, you will have cash available to hopefully pay for the next car without needing a loan. Keep doing this, and you will always have enough cash to be able to buy your next vehicle, especially if you keep your cars until they die.

In addition, this would give you an added level of efund money that you could tap if you needed it, but you do also need a real efund that is only used for those emergency expenses that come up along the way.
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You do not need to get a car loan to establish credit...

I would go one step further, and remind OP that you don't need to get a car loan to buy a car. Boy, do I wish that I hadn't had a succession of car loan payments during my 20's!

ETR, paid cash for a 2-year old Ford SUV, still driving it nearly 10 years later, and loving the cash flow
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paid cash for a 2-year old Ford SUV, still driving it nearly 10 years later, and loving the cash flow

4-yr loan for a new Honda Civic, still driving it nearly 20 years later, also loving the cash flow. I have since bought 2 new and one used car (had to sell one of the new ones to upgrade to a used minivan.)

I would like to buy the next one in cash, but probably won't. The small amount of interest on a car loan ammortized over 15+ years is pretty minimal. Compared to operating costs, it is almost negligible.

v/r
Tom
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Have you actually checked to see that you don't have a credit score ? If you haven't paid late or had any other dings, you may be pleasantly surprised without any machinations.

BTW, your financial aid budget likely included something for transportation - you may want to see how much that is, too.
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There are a lot of mixed feelings that I am getting about credit cards, some swear by them as useful and important, others think they should be burned upon sight.

Credit cards are a useful financial tool. As with any tool, they can be misused.

First time credit is much more difficult that it has been recently. Do you have access to a credit union? They may have a secured card with reasonable fees.

A major problem with secured cards is that many are marketed to those who have previously failed with credit. They can have ridiculous fees and a minimal credit limit (which is immediately used by the fees).
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I would go one step further, and remind OP that you don't need to get a car loan to buy a car. Boy, do I wish that I hadn't had a succession of car loan payments during my 20's!

Although true, for a first car it can be difficult. Someone who is relying on a car to be able to generate an income (public transit isn't an option for everyone) can't tolerate an unreliable car.

I did buy a new car shortly after getting my first job after college. The used car I had for college was became unsafe and to expensive to repair. The price was reasonable for my income. It hasn't left me with any feelings of being stressed about the car payment.
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Cash for a new Yaris. Still driving it 4 years later.
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Jacketfan,

You wrote, I would like to buy the next one in cash, but probably won't. The small amount of interest on a car loan ammortized over 15+ years is pretty minimal. Compared to operating costs, it is almost negligible.

Probably true if you have good, established credit. Interest expense for used cars to people with little or poor credit aren't so minimal.

- Joel
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Probably true if you have good, established credit. Interest expense for used cars to people with little or poor credit aren't so minimal.

I almost added that caveat, but didn't. I had an unfair advantage in that I used a recent ROTC grad military officer loan with a good rate and 6-months deferred payment. Credit wasn't an issue (although I suppose blatant bad credit would have been.)

v/r
Tom
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Get a secured loan, such as a secured credit card. That is the easiest way to establish your credit.

My first loan in 1997 was a mortgage, which is a secured loan. I couldn't qualify for a credit card until a few months after buying the house.
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