Yeah, the cellphone plan will do. You just need to show some usage to establish credit history.
How old are your collections? The older the collection, the less it hurts your score. Unfortunately, for credit scoring purposes unpaid and paid collections are equally negative. That’s why it’s very important to try to get them deleted. Specially if you are looking to apply for a home loan.
In the eyes of a lender, a paid collection is much better than an unpaid collection. When asking for a personal or home loan, a lender looking at your credit report will prefer paid over unpaid debt, so I think it’s always a good thing to pay your debts. Of course, a lender will prefer not to see collections at all on your report.
When you’re applying for a credit card (or even a car loan), these are usually automated applications. A computer pulling your report and making a decision based on certain requirements. Some banks will deny you (in less than 60 seconds) if you have a collection on your reports (paid or unpaid). But as I mentioned before, the older the collection, the less it hurts your score. A 4 year old collection will not hurt you as bad as a 6 month old collection.
The Amazon store card does report to the three bureaus (it reports as a store credit card). It’s offered by GE, which is known to be generous with credit line increases (that’s something I can’t say about Capital One). The GE store card is also easier to get than the other Amazon credit card offered by Chase.
I like your way of thinking. You should only spend what you can afford to pay. I would rather not worry about credit at all and use cash for almost everything. However if you want to buy a car, a home or something that requires big money, you got to start playing the credit game.
Use credit to your advantage, don’t go crazy with it ’cause it can get you into a lot of trouble. A lot of people become addicted to credit cards, they like being approved for stuff and have 10, 15, 25 cards. I don’t see the benefit.