Six Ways To Establish Credit
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During our conversation she told me about her troubles establishing credit and asked my advice. I’m sure this is a big problem with many graduates and for others it seems like the banks practically throw credit cards at them. It can be puzzling to figure out.
Let me share some of what I shared with my friend on getting a credit history established.
One of the problems she had was she graduated without student loans - which is great - but they would have established a credit history for her.
Now don’t get me wrong. I’m not saying you should go get a student loan. Do it only if you have no other way of paying for your college because you’ll be stuck making payments for 10 years after graduation if you take one. So how else can someone with no credit history get started?
Six Ways You Can Get Established With The Credit You Deserve
- One of the most obvious ways is to open a bank account. Not just any bank, see if there is a credit union you can join. When you apply for a credit card you will probably be asked if you have a bank account (checking and savings).
- Apply for a secured card and start establishing yourself by using it responsibly.
- Be careful to keep your credit purchases to approximately 20% to 30% of your credit limit. That means if your bank gives you a credit card with a $250 limit you must keep your charges to $75 or less.
- One of the best ways to be sure you always live within your means is to establish a budget. A budget is like a roadmap. If you start using a budget from day one you will never get into credit trouble.
- Be careful not to overdraw your bank account. Not only will you accrue fees but also a bad reputation with your financial institution. Do that too many times and your bank may cancel your account.
- It should be obvious but let’s say it anyway – don’t miss or be late on any credit account. This is the quickest way to damage your credit. Make your payments (all of them) on time or better yet early. A better plan is to pay the balance off each month.
