I hate credit. I don't even want to use it....

[BeeVo]

So lately I have been getting serious about purchasing a house. I talked with a mortgage broker and I need to establish more lines of credit(I have a credit card). He suggested taking out an auto loan or other loan and pay on it for around 6 months to help establish this.

So today I try and get a loan for a motorcycle. Of course on my limited credit I got declined so they offered to set up a secured loan. As I think about this idea it really strikes me as asinine. I give you my money that I can't touch and you allow me to make payments on this? How is this a loan? In all honesty I just want to pay cash for everything(except a house). Anyone have any creative ways of helping me build my credit? I don't want to purchase anything, I have pretty much everything I need.

 

[dullard]

Originally posted by: BeeVo
So lately I have been getting serious about purchasing a house. I talked with a mortgage broker and I need to establish more lines of credit(I have a credit card). He suggested taking out an auto loan or other loan and pay on it for around 6 months to help establish this.

So today I try and get a loan for a motorcycle. Of course on my limited credit I got declined so they offered to set up a secured loan. As I think about this idea it really strikes me as asinine. I give you my money that I can't touch and you allow me to make payments on this? How is this a loan? In all honesty I just want to pay cash for everything(except a house). Anyone have any creative ways of helping me build my credit? I don't want to purchase anything, I have pretty much everything I need.

This is your statement: "I hate borrowing money, I don't even want to borrow money, so I want to borrow money." That statement doesn't even make sense. Therefore, your logic doesn't make sense.

1) Get over your fear of borrowing money. If you pay it back immediately you are far better off than if you paid in cash.
2) Use your CC.
3) Heck get another CC and use that.
4) Show people that you can borrow money AND pay it back.

If you can do that, then they'll give you a big loan on good terms (ie your mortgage).

 

[BeeVo]

Originally posted by: dullard

Originally posted by: BeeVo
So lately I have been getting serious about purchasing a house. I talked with a mortgage broker and I need to establish more lines of credit(I have a credit card). He suggested taking out an auto loan or other loan and pay on it for around 6 months to help establish this.

So today I try and get a loan for a motorcycle. Of course on my limited credit I got declined so they offered to set up a secured loan. As I think about this idea it really strikes me as asinine. I give you my money that I can't touch and you allow me to make payments on this? How is this a loan? In all honesty I just want to pay cash for everything(except a house). Anyone have any creative ways of helping me build my credit? I don't want to purchase anything, I have pretty much everything I need.

This is your statement: I hate borrowing money, I don't even want to borrow money, so I want to borrow money. That statement doesn't even make sense.

1) Get over your fear of borrowing money. If you pay it back immediately you are far better off than if you paid in cash.
2) Use your CC.
3) Heck get another CC and use that.
4) Show people that you can borrow money AND pay it back.

If you can do that, then they'll give you a big loan on good terms (ie your mortgage).

I use my credit card regularly and pay it off each month. I have no problem borrowing. The mortgage broker was saying it is best to open up other lines of credit other than more credit cards. Is he correct in saying this or does it all show up the same on my credit report?

 

[dullard]

Originally posted by: BeeVo
I use my credit card regularly and pay it off each month. I have no problem borrowing. The mortgage broker was saying it is best to open up other lines of credit other than more credit cards. Is he correct in saying this or does it all show up the same on my credit report?

For optimum credit, you need to have maybe 4-5 lines of credit. One of which you don't use. There are plenty of reasons for this, that I'm not getting in to.

As far as I know, all sources of credit are weighted the same. Those 4-5 lines of credit could be all credit cards, all loans, or any combination in between.

Then use them and wait. Credit building mostly just takes time. If you wanted a house, you should have thought of this several years ago (had multiple credit cards, a student loan, or whatever). I'm sorry, but you just can't suddenly create good credit.

Opening up several lines of credit now may even temporarilly harm your credit score (until you have proven that you can and will pay all of them back then it will rise significantly).

 

[necine]

I have student loans.. I guess they help? I don't know man.

 

[BeeVo]

Originally posted by: dullard

Originally posted by: BeeVo
I use my credit card regularly and pay it off each month. I have no problem borrowing. The mortgage broker was saying it is best to open up other lines of credit other than more credit cards. Is he correct in saying this or does it all show up the same on my credit report?

For optimum credit, you need to have maybe 4-5 lines of credit. One of which you don't use. There are plenty of reasons for this, that I'm not getting in to.

As far as I know, all sources of credit are weighted the same. Those 4-5 lines of credit could be all credit cards, all loans, or any combination in between.

Then use them and wait. Credit building mostly just takes time. If you wanted a house, you should have thought of this several years ago (had multiple credit cards, a student loan, or whatever). I'm sorry, but you just can't suddenly create good credit.

Opening up several lines of credit now may even temporarilly harm your credit score (until you have proven that you can and will pay all of them back then it will rise significantly).

So a secured loan should weigh the same? Any disadvantages to doing a secured loan? Thanks for your help.

 

[hanoverphist]

 

[dullard]

Originally posted by: BeeVo
So a secured loan should weigh the same? Any disadvantages to doing a secured loan? Thanks for your help.

You are welcome. Few people in the world know the exact formulas for the credit score, so the best we can do is go from general guidelines. As far as I know, all forms of credit are weighted the same. You borrowed money and you paid it back. It shouldn't matter what name is associated with that transaction.

The biggest disadvantage that I see of a secured loan is that you don't seem to need the money so this is just extra effort and cost.

Try talking to your broker and see what difference a better score will have. Is this a minor thing or a major problem? Also, have you spoken to other brokers?

 

[Rapidskies]

Get a loan and pay it off in full.

 

[BeeVo]

Originally posted by: Rapidskies
Get a loan and pay it off in full.

I can't since I have limited credit or else I would pull money out, not spend it and pay it back after a few months.

 

[hellman69]

Have you tried getting a loan from a Credit Union?

 

[Kelvrick]

Wait, wait. Where did you go that they wouldn't even give you a loan? For a motorcycle? Did you have any downpayment?

Freak, my friend who doesn't even have a credit card and still in college with only like 1k down qualified for a loan for a new motorcycle.

 

[MrDudeMan]

Dullard,

I was told that having different lines of credit improves your score, but it actually does matter where they came from. I have 3 credit cards, a student loan, and I paid for an engagement ring with a loan even though I had the cash. I got the 12 months 0% deal and just paid it off after the no interest period expired. I checked my score after that (about 3 months later) and it seemed to rise. I have no idea if simply having more credit history improved the score or if a different type of credit line made the difference. I am 21 and I just bought a condo on my credit alone, so I must be doing something right, but honestly you seem to know a lot of the finer points unlike myself.

OP, you should get better credit just because it is so easy and very helpful, even if you hate it. I haven't paid a penny in interest on a loan/credit card to date and they have paid me literally thousands of dollars in rewards/cash back/etc.. I got a 5.8% interest rate on my mortgage as a first time home buyer because of strong credit and I'm nothing special. Start improving your credit now - you will benefit from it later.

 

[BeeVo]

Originally posted by: Kelvrick
Wait, wait. Where did you go that they wouldn't even give you a loan? For a motorcycle? Did you have any downpayment?

Freak, my friend who doesn't even have a credit card and still in college with only like 1k down qualified for a loan for a new motorcycle.

I went to Zions Bank here in Utah. I have banked with them for years and have my CC with them. I could put money down for a down payment easy since I can purchase the motorcycle on my own, I just want to build some credit. I think I am going to do as the person mentioned above and try through a credit union.

 

[Kelvrick]

Originally posted by: BeeVo

Originally posted by: Kelvrick
Wait, wait. Where did you go that they wouldn't even give you a loan? For a motorcycle? Did you have any downpayment?

Freak, my friend who doesn't even have a credit card and still in college with only like 1k down qualified for a loan for a new motorcycle.

I went to Zions Bank here in Utah. I have banked with them for years and have my CC with them. I could put money down for a down payment easy since I can purchase the motorcycle on my own, I just want to build some credit. I think I am going to do as the person mentioned above and try through a credit union.

What bike were you going to get? New or used? At least for the japanese brands, they have promotions and its pretty easy to qualify through them at a dealership.

 

[HannibalX]

Do you own your car? Go to the bank and get a signature loan. Put the car up for collateral.

Wait 30 days and then pay off the loan (don't spend the $$$ in the mean time).

 

[TheNinja]

I would think any bank with half a brain would give you a loan if you put 20% or more down. It's win-win for them. You either pay off the loan and that get interest, or you default and they get the bike and can sell it to pay off the loan.

 

[kranky]

Read What's in My Credit Score from myfico.com.

 

[elmro]

No one is forcing you to use credit. Save up the entire price of the house, and buy one with 100% cash.

 

[EagleKeeper]

Some parts of the coutrny, the government will provide you with the land for a house. You just need to build it yourself within a set period of time.

How you choose to live is up to you though.

 

[Aikouka]

BeeVo, see if you can get a loan for that motorcycle if you get a co-signer. Try a different bank with that approach if you need to. Heck, when I was buying my new car, I have a decent amount of credit (and a good credit score), but my bank still wanted me to have a co-signer on the loan.

Originally posted by: Rapidskies
Get a loan and pay it off in full.

Bad idea. Getting a loan and instantly paying it off doesn't affect your rating at all, because it doesn't prove that you can pay over time.

Originally posted by: MrDudeMan
I was told that having different lines of credit improves your score, but it actually does matter where they came from. I have 3 credit cards, a student loan, and I paid for an engagement ring with a loan even though I had the cash. I got the 12 months 0% deal and just paid it off after the no interest period expired. I checked my score after that (about 3 months later) and it seemed to rise. I have no idea if simply having more credit history improved the score or if a different type of credit line made the difference. I am 21 and I just bought a condo on my credit alone, so I must be doing something right, but honestly you seem to know a lot of the finer points unlike myself.

It's because like I said above... you proved more-so that you can pay on time and in the specified installments. It's all about proving your "worth" so to speak.