Credit Secrets & Tips

On your first attempt to get credit, you may face a common frustration: sometimes it seems you have to already have credit to get credit.

When you apply your credit, some creditors will look only at your salary and job and the other financial information you put on your application.

But most also want to know about your track record in handling credit–how reliably you’ve repaid past debts.

If you have no credit history, it may take time to establish your first credit account.  Here are 5 ways you can begin to build up a good credit history:

(1).  Open a checking account or a savings account, or both.
 
These do not begin your credit file, but may be checked as evidence that you have money and know how to manage it. 

Cancelled checks can be used to show you pay utility bills or rent regularly, a sign of reliability.

(2). You might borrow a small amount from your credit union or the bank where you have checking and savings accounts.

Some banks may approve your credit application even if you do not
meet the standards of larger creditors.
(3).  Apply for a department store credit card. Repaying credit
card bills on time is a plus in credit histories.

(4).  Ask whether you may deposit funds with a bank to serve as
collateral for a secure credit card. 

The banks will issue a credit card with a credit limit usually no greater than the
amount on deposit.

(5).  If you don’t qualify according to your current credit rating, you may ask someone co-signs a loan to established credit history for you.

Because a co-signer promises to pay if you don’t, this can substantially improve your chances of getting credit. Once you have repaid the debt, try again to get credit on your own.

Most important, before you apply for credit, ask whether the creditor reports your credit history information to credit bureaus.

Most creditors do, but some do not. If possible, you should try to get credit that will be reported. This builds your credit history.

If you’re turned down, find out why and try to clear up any misunderstandings.  There maybe reasons other than lack of credit history. 

Your earning may not meet the creditor’s minimum requirement or you may not have worked at your current job long enough. Time may resolve such problems.