Establishing credit

[adlove]

H and I are beginning to search for houses, and after meeting with mortgage brokers we found out that while his credit is excellent, I basically don't have any. At all.

So it was advised to add me as an authorized user to his cc account, and possibly to open up some low limit card, Target or similar, for me to start using. They also advised that when purchasing my car (which we planned to pay cash for) we should finance it under my name.

So we bought a car yesterday and put about half down, financed the rest at an ok rate. We plan on paying extra and paying it off early. What's the best method of repayment to boost my credit but also not pay a few thousand needlessly in interest. We thought about doing a few lump sum payments to speed up the process. The car salesman told us that making payments for at least 2 yrs would be most beneficial.

We put 12k down and the loan amount is around 15,500 with an interest rate of 5.2%. Any tips on the smartest repayment schedule? We basically planned to pay cash so we have the funds to pay it off as aggressively as we want, I just want to know how to go about doing so.

Thanks!

[ssmjlm]

With an interest rate over 5% on a car, I would be working to pay it off asap. So I would say no more than a year.

[adlove]

Jan 10, 2013 9:01:35 GMT -5 ssmjlm said:

With an interest rate over 5% on a car, I would be working to pay it off asap. So I would say no more than a year.

This was our gut feeling too. I never wanted that monthly payment anyway.

Are there better ways to go about building credit that financing a car isn't even necessary?

[ssmjlm]

I would go with your plan, get a cc on your own and just charge a bit and pay it off every month.

[Susie]

I'd rather build credit with a no-annual fee credit card than a car loan that you're paying interest on. Then it's free. With minimal credit history you probably won't qualify for any of the cards that have really good rewards programs, but you can check out www.bankrate.com/credit-cards.aspx to find some that might be good picks for you.

You can also have your H add you as a joint owner on his credit card accounts (not just an authorized user). Then you get the benefit of his history with those accounts.