You
need credit history before you can get credit, but can't establish
history without having the credit to start with. Here's How:
-
Correct errors on your credit
report. Your report must prove to the lender that he will get
his money back.
-
If turned down for credit within
30 days, you can get a free copy of your report to find out
why. Otherwise you can get a copy for $8 from the credit bureau.
-
One option to build credit
history is too piggyback onto someone who already has a good
credit and is willing to co-sign. Just remember that if you
default, their credit suffers.
-
With co-signing, you make payments
on or before the due date. Do not pay in full until the bill
actually arrives since this completes the billing cycle and
establishes 'pays on time' on your report.
-
Ask the co-signer to repeat
the generosity (if necessary). Then create a debt, wait until
the first bill comes, and pay it off in full. Keep repeating
until you no longer need the co-signer.
-
Another method to create history
is to locate a financial group who offers a 'secured credit
card'. With this option you deposit money into a savings account.
Your credit limit then equals your savings.
-
Using the secured credit, create
a debt on the new card; wait until the first bill comes; pay
the bill off in full or make payments; repeat until you can
establish unsecured credit.
-
Some retail and gasoline credit
cards are not revolving (do not carry a monthly balance) and
sometimes are easier to obtain than regular cards. Over time
they can help establish history.
Tips
-
Eliminate the need for the
co-signer or secured card savings as soon as possible. You'll
be much further ahead.
-
If you are a follower of this
site, you know that I advocate not having credit as your way
of life. That having been said, I highly recommend to pay off
your balance IN FULL, every month.
- Once credit is established and to maximize
your credit score, maintain your credit balance below 30% of your
maximum.
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