Building Credit History
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When it comes to building credit history here's a very unfair truth.
Paying your rent, utilities and phone bill late will be recorded on your credit report, but paying them on time is not recorded. You could still be turned down for a loan due to a lack of credit history.
It is important to establish a credit history before you actually need that car or home loan and it is easier than you might think. One of the simplest ways to establish a good credit history is through credit cards.
Credit cards are much simpler to get than an auto loan or home mortgage, but if you use them wisely you will be pleasantly surprised with the results. This is your opportunity to prove to the world that you can act responsibly!
In my opinion the definition of a responsible person is someone that can carry a credit card in their pocket without using it.
Here are a few simple tips to get you started building a good credit history:
Start Small And Work Up
Most people with no credit history will not be able to get a credit card with a large credit limit and yours will be no exception. You will have a small credit limit – don’t max it out just because you can. Your credit score can be lowered just because you charge more than 30% of the limit. Even if it’s $200 or $500 remember that it’s NOT free money.
Think of a credit card this way. It’s there for an emergency, yes, but it’s also for PROVING to banks that you are a trustworthy person. If banks know that you won’t bite off more than you can chew they will feel more comfortable loaning you MORE money.
Be Sure To Make Your Payments On Time
Late payments will lower your credit score and will stay on your record for a long time. Also if you only use the credit card to make small purchases it will be easier to pay it off every month.
What if you are having a hard time even being accepted for a credit card? Don’t panic; there are still ways to start building your good credit history.
Here are a few ideas:
Ask Your Parents About Adding Your Name As An Authorized User On Their Card
Check to be sure that their credit is good though for obvious reasons. When you are an authorized signer on someone’s account every ON TIME payment is recorded on YOUR credit and THEIRS. But every LATE payment is also recorded on both of your credit reports.
One other thing, the person who is adding your name will have to ask their lender to be sure it is credited to your history. Some lenders only report if the authorized user is married to the primary holder.
Get A Secured Credit Card
A secured credit card requires a deposit. This makes the card issuer feel secure because if you don’t pay they take it from the deposit, however that will damage your credit – so don’t do that.
Getting a credit card is one of the best ways to establish your credit history. Get your GOOD credit history in place early and you will have nothing to worry about when you need that loan for a car or home. And when you are ready for those come on back to our site because we can show you some helpful tips to make that easier too!
Click here to see our list of credit card companies.
Paying your rent, utilities and phone bill late will be recorded on your credit report, but paying them on time is not recorded. You could still be turned down for a loan due to a lack of credit history.
It is important to establish a credit history before you actually need that car or home loan and it is easier than you might think. One of the simplest ways to establish a good credit history is through credit cards.
Credit cards are much simpler to get than an auto loan or home mortgage, but if you use them wisely you will be pleasantly surprised with the results. This is your opportunity to prove to the world that you can act responsibly!
In my opinion the definition of a responsible person is someone that can carry a credit card in their pocket without using it.
Here are a few simple tips to get you started building a good credit history:
Start Small And Work Up
Most people with no credit history will not be able to get a credit card with a large credit limit and yours will be no exception. You will have a small credit limit – don’t max it out just because you can. Your credit score can be lowered just because you charge more than 30% of the limit. Even if it’s $200 or $500 remember that it’s NOT free money.
Think of a credit card this way. It’s there for an emergency, yes, but it’s also for PROVING to banks that you are a trustworthy person. If banks know that you won’t bite off more than you can chew they will feel more comfortable loaning you MORE money.
Be Sure To Make Your Payments On Time
Late payments will lower your credit score and will stay on your record for a long time. Also if you only use the credit card to make small purchases it will be easier to pay it off every month.
What if you are having a hard time even being accepted for a credit card? Don’t panic; there are still ways to start building your good credit history.
Here are a few ideas:
Ask Your Parents About Adding Your Name As An Authorized User On Their Card
Check to be sure that their credit is good though for obvious reasons. When you are an authorized signer on someone’s account every ON TIME payment is recorded on YOUR credit and THEIRS. But every LATE payment is also recorded on both of your credit reports.
One other thing, the person who is adding your name will have to ask their lender to be sure it is credited to your history. Some lenders only report if the authorized user is married to the primary holder.
Get A Secured Credit Card
A secured credit card requires a deposit. This makes the card issuer feel secure because if you don’t pay they take it from the deposit, however that will damage your credit – so don’t do that.
Getting a credit card is one of the best ways to establish your credit history. Get your GOOD credit history in place early and you will have nothing to worry about when you need that loan for a car or home. And when you are ready for those come on back to our site because we can show you some helpful tips to make that easier too!
Click here to see our list of credit card companies.
