Hey guys,

I'm fresh out of university and fresh into a white collar job. Financially, I'm in a good state; I track my spending and I budget all of my money. I save up money to use for investing and to use for things that I enjoy. I live well within my means and I have an emergency fund prepared.

I attended a crash course recently aimed towards first time home buyers (don't worry, I don't plan on buying one anytime soon). One of the speakers mentioned that having a good credit rating can greatly help with your bargaining power with the bank. He then suggested that we get a credit card to start building our credit rating from now. I'll find something with little to no annual fees (or one with low requirements to waive the fee), avoid all the late payment interest and use it entirely just to build credit. I am aware that having a credit card does not give me free money, it's simply an alternate way of using money I already have.

Is this a good idea or a bad idea?

The speaker wasn't a representative from the banks, so on the surface it doesn't seem like he had anything to gain from people signing up for cards. His reasoning was the same as what zenwell said; from a bank's point of view, someone with no history of bill payments is harder to trust than someone with a good history of bill payments. Curious to know what else you have to say about this.

And thanks to everyone for the replies so far. They've been helpful

This post has been edited by Prodigenous Zee: Oct 14 2014, 12:42 PM

No one here is saying that having a good credit rating will instantly get you amazing and godly loans. You seem to be under the impression that what we think credit rating is everything. That is not the case at all. What we're simply trying to say that having a good credit rating is a bonus on top of your annual income and savings. It is not the first thing a bank officer will look for. We are not saying that the bank will reject your loan due to bad credit rating even if you have enough money in savings and good income.

Do you have something personal against credit cards?

Cashless transactions are the future looking forward to the day that Apple Pay/Google Wave is adopted in this region. Paying through my phone would be so much simpler. Even Tesco nowadays accepts cash on delivery via credit cards.

As long as the other party is very clear with their background, then there's no reason not to engage in healthy discussion. In this case, wild_card_my's background is pretty clear. There's no such thing as a healthy debate where only one party wins by putting the other party down; if you stay mature and level headed then there is no reason to resort to personal attacks.

Back to the case at hand, wild_card_my has tabled a good point in where taking a longer loan is not necessarily a bad thing as it still allows the option for the borrower to repay at the original loan tenure that they intended. Do you have a point to counter this? As a curious bystander, I am really interested in getting both sides of the table.

It's just that the whole "I won't reply to someone who has a professional motive" and the whole dragging our feet along with "Be patient, Little Grasshopper..." thing made it seem like you had a big counter point against what was said. At the end of the day your reply to the whole thing could have been summarised in a few short sentences:

"wild_card_my is correct. However, in the case that John is not disciplined with his money, then there is a bigger temptation for him to divert from the plan of paying a higher instalment and spending the money elsewhere. John may end up digging a bigger hole for himself in the long run. For the financially smart people who do the math, it wouldn't be a problem. But what about the average Joe?"