Building credit for beginners
As long as a credit card is being paid off in full each month, your credit score will rise.
Two MasterCard credit cards are shown. If you've had trouble with identity theft, it's a good idea to keep watching your old card, even if you're not actively using it anymore, writes guest blogger Trent Hamm.
Photo illustration / Jonathan Bainbridge / Reuters / File
What’s inside? Here are the questions answered in today’s reader mailbag, boiled down to five word summaries. Click on the number to jump straight down to the question.
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The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two. Our busy lives are crazy enough without having to compare five hundred mutual funds – we just want simple ways to manage our finances and save a little money.
Recent posts
1. Switching credit cards
2. Accepting pay for articles
3. Building credit
4. USPS refund on principle
5. Marriage and alcoholism
6. Roth 403(b) contributions
7. Reaching a teenager financially
8. Student loan repayment
9. Victim versus doing it yourself
10. Meatie versus veggie
From Thursday through Sunday, we had two house guests who traveled nearly 2,000 miles to see us. From Friday through Sunday, we had two more guests. On Saturday evening, we had three additional people over for a dinner party.
Not once did we eat out, although we did have to make an extra grocery store trip. Our cost per meal per person over the entire weekend was about $1.50, and virtually every guest seemed to be happy with everything we served.
We’re getting good at this. Are we ready to host an extended family Christmas event? Maybe not.
Q1: Switching credit cards
My husband and I are in our mid-twenties with no debt. No student loans, no CC debt or car loans. We each have a small retirement account through our respective jobs although we plan on moving in the next couple years so I can go back to grad school. I have a credit card through a certain large bank that I’ve had since I graduated from high school, approximately seven years ago. I use it occasionally, about 6-10x/month as a way to add to my credit history. Problem is, my number has either been hacked or stolen three times in the past year so I’ve had to get a new card each time. It’s a very big pain and the bank’s customer service is terrible and I’ve gotten the run around each time having to dispute the charges.
Would it be worth canceling this card and getting a new one through our credit union? I don’t have a problem with interest (it’s lower through the CU though) since we pay it off each month. My husband and I each have a credit card through Wells Fargo that we opened when we were in college but haven’t used in about two years since we no longer bank with WF. I’m worried since we’re young (and the husband doesn’t use any CCs) canceling would hurt our credit score when we start looking for a home in the next five years. We only use a debit card for all our other purchases. What do you think?
- Carla
If I were you, I’d simply stop using the card for now and delete the card number from every online service where it appears. Then, I’d apply for a different card (while leaving the old one open), probably one from a different financial institution (like your credit union). In a few years, you can cancel the old card with minimal impact on your credit.
There seems to be some identity theft issues going on here. Usually, such issues occur when someone uses the card at a bogus or disreputable website. You might want to also consider carefully monitoring how both cards are and will be used.
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