Credit Building for our son....

[dragonlord]

Our son is a young Marine looking to purchase a motorcycle for use when he's on leave. We just borrowed from Equity Line for some repairs and have enough left over to help him but cannot figure out a way to do where he gets credit for it. Anyone got any ideas? Bottom line we wish to help him build his credit.

[gjimene2]

ok, how about this then.

Let him buy the bike, and the money you have for him, let him use portions of it on his payments, like 50 a month or more depending on how much you have left over. That way his portion is smaller to pay and it gives him credit because he's making payments on-time

[vass0922]

One option would of been to let him take out the loan with you co-signing. That way he's making the payments and getting the credit for it.

If anything let him get a small credit card, make some purchases for the bike and make minimum payments on the CC (don't pay it off immediately, that doesn't help credit much)

[no1_vern]

I agree with Vass its the best way.
Also:

For little or no prior credit history,

Limit the number of accounts you have. Resist the temptation to sign up for every credit card you can(too much credit is as bad as to little credit).

When choosing a credit card, find a revolving credit card that has a reasonable credit limit ($300 maximum) and stay within your budget.

Pay your bills on time. Every month, your creditors release information to the credit bureaus. Make sure your creditors are reporting only positive information about your bill-paying history.
Check his history after 6 months or so to make sure they are correctly reporting what he is paying.

Do not let him go to one of those fly by night loan agencies that loan money out by the week/bi-weekly/month, they ususally charge the highest possible APR usually in the 30-40 percent range!

Do not let someone make multiple "hard inquires" for him.
Too many inquiries can hurt you when it comes time for you to apply for a loan. There are two types of inquiries that show up on the credit report, and only one type counts against him, they are called "hard" inquiries.
Avoid six or more hard inquiries per any six-month period. Don't authorize anyone to run his credit unless he plans to rent or buy from that individual. Don't sign up for any credit that he doenst need.

[gjimene2]

I disagree on vass on the minimum payments. If he starts doing that, he'll never pay off the CC's.


Since you already have the extra cash and want to help him out, why not do what Vass said, let him take out the loan and make the payments.

Also with what I stated, if you want to help him out, make partial payments until the rest of the loan that you got out is used up.

[vass0922]

gj - Buiding credit has nothing to do with paying off the CC's...

Making minimum payments is what the creditors love... its what makes them money.
Paying off your CC immediately does very little for your credit.. I was assuming he was paying min on a low credit balance to help build it only... if he keeps it low he can pay them off pretty quickly when he's ready to get into larger credit like cars.

I disagree w/ vass as well. Making the minimum payment is NOT going to build your credit. The only way to "build credit" is to borrow and then pay back on time.

If you pay off the amt on your card every month, you're building credit the same as if you just made the minimum. The only thing is, the CC company gets more money when you don't pay off the balance every month. The CC companies don't decide if you have good credit, the Credit Reporting Agencys do. If you have a good history of paying your bills on time w/ no late payments, you'll have good credit.

[RicheemxX]

well I think you all ahve the wrong approach here. If you don't plan on touching the "extra" moeny for awhile then I'd co-sign him a secured loan wich will lower his intrest rates on the motorcycle and allow him to build credit. Giving him a CC to use isn't going to help him buy the motorcycle but it will allow for credit building assuming he uses it responsibly and makes the payments. I wouldn't just pay the min I'd pay a decent portion down on the card every month no matter what. You build credit by using the card and having some revolving credit monthly as long as you make your payments on time and never go over your limit it will be fine. Might even want to make him open a secured credit line {more than likely the best bet anyways} something around $200 is a good start

[phenious]

He is in the miltary so I recomend looking up www.usaa.com and shooting them an e-mail or calling em. They have great deals for military members ranging from banking to insurance.

-: phenious :-