How To Establish Credit
If you would like to know how to establish credit, good credit that is, then read on. In this
article we will look at the eternal Catch 22 situation involved with no credit history, which first step to
creating a good credit history you can take today, and why a store card, being a good employee to your boss, and
secured credit can all help you.
Establishing a good reliable credit history is not easy when you have none. Without a good credit history few if
any places will be willing to give you credit, but without receiving credit you are in a situation where you cannot
possible establish a good credit history.
It's the infamous Catch 22 situation; you chase your tail going nowhere, but there are ways around it. You have to
make a start and know that you won't get a credit history overnight. It will take time and the sooner you start the
sooner you will get there.
One of the best ways to start for anyone wondering how to establish credit is to open a bank account. You will need
to maintain the account with incomings and outgoings on a regular basis. It doesn't need to be a lot of money, just
enough to let anyone see that you are serious and capable of managing some money.
Start with a checking account at least. A saving account is a good idea too. Use the accounts regularly, though not
unnecessarily. It has to be natural and not forced. If you have regular monthly bills to pay, then paying them
through your bank by setting up payments would be a good idea.
Store cards are generally not a very good idea. You will find that they open up ways of spending money that you
never imagined. They will offer you attractive discounts to lure you in, and then you will find yourself paying
interest rates that resemble your grandmother's age. However, there is a way to use store cards to your advantage
when you need to know how to establish credit.
Only take out a store card if the store reports to the credit bureaus. Ask them upfront and get an answer you can
depend on. If they don't report your credit, then the card will be of no use to you. Don't go on a spending spree,
or at least you don't have to. It will be best to keep the spending low, but what is more important is that you
establish and maintain a good payment history with the store card.
Your history of employment is considered when your credit history is referenced. If you are constantly changing
jobs, or worse, getting thrown out of jobs, then this will go against you. The more stable your employment history
is the better it will be for you. If you have only had one or two jobs since leaving school or college, you will be
seen as being more dependable and stable.
If all else fails, try secured credit. Most banks will do this. Simply put, you deposit, say $500 with the bank.
They give you a credit card with a limit of $500. Your deposit of $500 covers the credit and you will lose it if
you fail to make repayments
However, the question of how to establish credit is only served best by making timely repayments,
thereby establishing a good credit history over time.
Credit in Minutes Tip #1
Stay on top of your credit report. Most credit reports contain errors. Make sure you check your credit report
every year (you get one free credit report every twelve months) and if there are errors make sure to challenge them
with the reporting credit agency. Credit agencies are required to investigate each and every challenge that gets
Credit in Minutes Tip
Just because you qualify for all of those credit cards does not mean you should get them. A person with too many
credit cards looks sketchy in the eyes of a potential creditor. Think of it this way: if a person is financially
stable does he or she need ten different credit cards? Wouldn’t just one or two suffice?
Credit in Minutes Tip
The best way to raise your credit score is to make all of your payments on time. It sounds too simple to be
true, but that’s all there really is to it. Staying out of debt and/or making all of your debt payments on time
will keep your score up where it should be.