How much should I have saved by 30 if I want to retire at 50? How can I get credit when I have no credit? What are the five most important things to know about credit?
Perfecting personal finance isn’t easy — and if you’re just getting started on your own, chances are you’ve got plenty of questions about managing your credit and earnings.
This is where one of Mint.com’s newest features, Mint Answers, comes in: we launched it to give consumers a platform to voice their personal finance and investing questions – and discuss them with other Mint users and community members. Since then, hundreds of you have asked – and many more have chimed in with responses.
In this week’s Mint Answers round-up, we give you some answers to the questions above.
I’m 20 years old, and I’ve already finished college so I can’t get a student credit card. I went to a 9 month accelerated college and got a certificate degree.
When I apply for a credit card I always get declined. One common reason I get is excessive inquiries in the last 6 months, so I waited about 6 months, applied again, and still got refused.
I have a checking account that I use every day, and a savings account that I’ve been saving money in. I’ve got a steady well paying job, and I don’t understand why I can’t get credit.
I have had overdrafts on my checking account a bunch of times but I always have enough money in my savings account. Could this be the issue?
I’ve been told I can get a ‘secured’ credit card by paying the bank $300 and getting $300 of credit, and after a year the original $300 I paid will be released back to me, but I’d rather not do this because I feel
like I’d be losing $300 for a year. I’m trying to move out of my parents’ house and $300 is a big chunk of what I’ve got saved up towards moving out.
Answer: Secured cards are fine but it will still take your credit file 6 months to qualify for a score if that’s the only account on it. The fastest way to establish credit (and then more credit) is to have yourself added as an authorized user to a credit card belonging to someone else. Make sure you have a legitimate relationship with the primary cardholder (FICO isn’t stupid), such as a parent. Getting added to the card of a friend may not work because FICO has new logic in their models that sniffs out these attempts to game their system.
If successful the account will likely hit your credit reports within 30 days and you’ll immediately qualify for a FICO score if the account is older than 6 months.
Then you may be able to qualify for unsecured cards rather than having to depend on secured cards.
Credit is a very complex topic. What do you think are the most important things to know about credit cards, credit scores, credit reports and anything credit related?
# 1 Don’t assume your credit reports are accurate
# 2 Don’t assume the scores you’re being sold online are relevant
# 3 If you have to choose between revolving and installment debt, choose installment
#4 You get at least one free credit report every year from each of the consumer reporting agencies, take advantage of the freebies
#5 Lather, rinse, repeat
…and take at least 4 luxurious vacations a year.
$1 million…OK, so not really but best suggestion is to run some numbers. Check out the Dinkytown’s Calculators to help you with it. Using this calculator, adjusting for taxes and inflation, assuming each vacation will cost $10,000 and that you want your money to last until you’re 90 you’ll need $750,000 already saved. Here are my inputs:
- Starting balance = 750,000
- Annual contributions = 7,500 (15% of a 50,000 salary)
- Pre-retirement ROR = 7%
- Post-retirement ROR = 5%
- Pre-retirement tax = 25%
- Post-retirement tax = 15%
- Inflation = 3.1%
- Years in retirement = 40
Do you have a money question that you feel has no black-or-white answer? Go to Mint Answers and ask away! While you’re there, feel free to answer questions from other community members. Come back often, as we introduce new enhancements to this feature.