Loans to earn Credit question

[Meractik]

Hey everyone, Just had a quick question about gaining better credit for someone with little to no credit. If i am eligible for a 0% APR loan for a term of 2 years and purchase a car and get the loan through the dealership, is this a good way of someone with very little credit to establish good credit? as long as payments are made on time... or should i actually foot the extra money and do a loan thats got some interest on it?

 

[spidey07]

I can see no reason why interest would have any bearing on your credit in any way.

 

[Meractik]

ya, i didn't think it would but i wasn't sure how they looked at credit whether they thought, oh he makes great payments but pays no interest so hes not really adding anything to prove his credit worthiness or something. thanks for clearing it up.

 

[FoBoT]

credit reports don't include details like the interest rate
http://www.myfico.com/CreditEducation/InYourReport.aspx

What?s In Your Credit Report
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Although each credit reporting agency formats and reports this information differently, all credit reports contain basically the same categories of information. Your social security number, date of birth and employment information are used to identify you. These factors are not used in scoring. Updates to this information come from information you supply to lenders.

Identifying Information.
Your name, address, Social Security number, date of birth and employment information are used to identify you. These factors are not used in scoring. Updates to this information come from information you supply to lenders.
Trade Lines.
These are your credit accounts. Lenders report on each account you have established with them. They report the type of account (bankcard, auto loan, mortgage, etc), the date you opened the account, your credit limit or loan amount, the account balance and your payment history.
Inquiries.
When you apply for a loan, you authorize your lender to ask for a copy of your credit report. This is how inquiries appear on your credit report. The inquiries section contains a list of everyone who accessed your credit report within the last two years. The report you see lists both "voluntary" inquiries, spurred by your own requests for credit, and "involuntary" inquires, such as when lenders order your report so as to make you a pre-approved credit offer in the mail.
Public Record and Collection Items.
Credit reporting agencies also collect public record information from state and county courts, and information on overdue debt from collection agencies. Public record information includes bankruptcies, foreclosures, suits, wage attachments, liens and judgments.

 

[JasonCoder]

I was told by a credit consultant wiz that the perfect credit candidate is one with two credit cards and two other loans (car, college, etc.) with neither of the cards being more than 20% utilized. And obviously as few black eyes on the credit report as possible.

 

[Meractik]

cool, thanks for the information everyone.

 

[dullard]

The biggest misconception is that the credit score knows how much profit companies are making off of you. But that is wrong. The car loan interest rate isn't reported. So the credit score doesn't know if the bank is making any money off of you.

Credit card interest rate isn't reported. So leaving a balance doesn't help your score (but it usually harms your wallet).

Etc.