Reading Time: 2 Minutes
Read this post. It shows you how to establish credit in three simple steps.
Establish Credit – How to Establish Credit
So you think you need credit? You may be on the right track. Most people do. Credit scores can affect whether you get an apartment, solid job, cell phone, car, and insurance rate. Your credit worthiness as perceived by the credit bureaus is important. Establishing credit and keeping up with creditors helps build a solid credit history.
You want to buy a home someday, right? You’ll need to have a solid credit rating to get a decent rate from a bank when you want to purchase a home (or LOTS of cash)!
Most everyone in the business world checks out your credit score before doing a deal with you. So, how do you establish credit? Follow these three simple steps and you’ll be on the right track:
1) Open a checking and savings account. Checking and saving accounts signal to lenders that you handle your financial affairs professionally. These accounts are the primary tools used to maintain an individual’s finances.
Establish Credit – How to Establish Credit
2) Use Credit. Open a charge account or two and USE them. Even if you prefer to pay cash use the cards periodically and pay them off in time and in full. I suggest making a couple of small purchases a month for about six months. You may have to pay an annual fee or secure the credit with a deposit. Go ahead and pay it to start establishing yourself as a reliable credit customer.
FYI: You’ll dump these fee-based or secured credit cards later on. You shouldn’t pay anything for a credit card. Credit cards are tools that you shouldn’t pay a dime to use.
3) Get a loan. You may not want or need a loan but get one anyway. I suggest getting a small loan or line of credit and depositing the money into a savings account or money market fund. Sure, you’ll pay some interest but the interest you earn in the savings or money market offsets some of your interest costs. Pay the loan off promptly to avoid any major differences in interest.
Establish Credit – How to Establish Credit
Keep in mind, the whole idea of this strategy is to establish credit payment history. It makes no sense to borrow this money on Monday and pay it back on Wednesday the same week. Just make your payments on time and stay out of debt!
Use these three steps and you will get a start on establishing good credit. Remember to pay in time and in full and you will have no problem securing future credit.
Click Here for the Best Books on Credit Building and Repair
Related posts:
Recent Comments