Tips to Establishing Credit

Tips to Establishing Credit

Some people may say "I don't have any credit.  What do I need to do to begin to get my credit established?"

Here are some ways to do just that.

When I started 20 years ago, trying to establish myself in the credit world, I applied for a $500.00 secured personal loan with a major company who is still doing business today.  My own personal belongings (televisions, furniture, etc.) secured the loan.  I made monthly payments for 12 months, which began my journey of establishing a good "credit name" for myself.  Every month, after I made the payment, this company was reporting to the 3 credit bureaus (Equifax, TransUnion, and Experian) that I made my  payment and that was then showing up on my credit report when it was looked at by other creditors/lenders.   

IMPORTANT NOTE: You MUST make payments on time.  That is CRITICAL when you are trying to establish yourself in the credit world.  You do NOT want to make any late payments because that will be reflected on your credit report and will have a NEGATIVE effect on your credit score.

There are many other ways to establish yourself in the credit world.  Here are just a few suggestions/tips.

- Obtain a "Secured Credit Card".  A secured credit card is a card in which YOU choose your credit limit by depositing an amount of money into an account.  That amount then becomes your credit limit.  (IE: You obtain a secured credit card and place $200.00 into your account.  Your credit limit on this card is now $200.00.)

- Obtain a Cellular Phone.  You will be required to place a deposit on the account since you have no credit score or credit history, however, most cellular phone companies will refund that deposit to you after one (1) year, providing you make your monthly payments on time.  NOTE:  You will need to check with the company to determine what their policy is with regard to the deposit.

- Rent To Own Furniture or Appliances.  NOTE: Make sure that the company you are dealing with reports to ALL THREE (3) credit bureaus.  This is extremely important when you are trying to establish credit.

If you are just beginning to establish credit you need to be prepared to pay a high interest rate on any loan that you obtain.  The reason for this is because you have not proven yourself to be credit-worthy.  The creditor/lender will charge a higher interest rate because they are taking a risk to loan you money when you have no track record of being responsible and paying back what you have borrowed.  Once you have established a good credit rating and credit score, you will be able to obtain loans at a lesser interest rate.

This article is brought to you by the PJ'S Team at Miller Housing Group.

For more information on this topic and many more, please visit us here.

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