How to Establish Credit

At first, credit may seem frustrating — you can't get credit because you’ve never had credit. Or you can’t rebuild your credit because you’ve had credit problems in the past. Fortunately, there are steps you can take to start establishing a strong credit history.

Lenders carefully consider your credit score because it provides them with an objective measure of your credit worthiness. Your score can be impacted by many factors such as late payments, delinquencies, or high amounts of debt. Lenders may deny your loan or charge you a higher interest rate if you have a low score. If you have a good credit history, you may have more options available to you resulting in lower interest rates and big savings.

Why you should establish credit
If you've always paid cash or used checks to make purchases, and haven't used credit, it's a good idea to start. And if you’ve had credit problems in the past, it’s important to re-establish your credit history.

• You may need good credit to connect you utilities.
• Good credit is important to secure financing when buying furniture, a computer, a car, or even a new home.
• Employers often check the credit rating of prospective employees. A solid credit rating reflects positively on your ability to manage your job responsibly.
• Renting an apartment may be easier. A good credit rating tells landlords that you are a person who's more likely to pay the rent on time each month.
• If you need a loan, banks may look more favorably upon you if you have a good credit history.

What a credit card can do for you
Besides being a good way to establish a credit history, credit cards are very convenient. They allow you to:

• Buy items online, over the phone, and from mail-order catalogs
• Make travel reservations, purchase airline tickets, and rent cars
• Shop more safely by not carrying a lot of cash
• Budget larger purchases by paying in installments
• Access funds in emergency situations

Credit Cards

• Secured Credit Card: With a Secured Credit Card, you place a deposit with the lender and are allowed to make charges up to the amount of the deposit. Secured Cards work like any other Credit Cards, allowing you to charge purchases and to either make the minimum payments or pay off the entire balance. You may be eligible to graduate to an unsecured Credit Card if you maintain the Secured Card in good standing and you make your payments on time.

Other ways to start a credit history

• Establish a pattern of regular payments by putting your apartment and utilities in your own name and paying your bills on time.
• Apply for department store and gas station credit cards. Don't get a new store credit card every time you get a discount offer, but one way to start a credit history is to have one or two department store or gas station cards.

Use your credit wisely
Once you start using credit, it’s essential to manage it properly. By using all of your credit responsibly, you can go a long way in building strong and healthy credit.

If you have any question or would like to know other resources to build your credit or maintain your credit please contact me.