Get a checking account if you don’t have one already. I first want to point out that bank accounts do not build credit history (nor do debit cards, even if they have a Mastercard or Visa logo), but you still need one. Loan and credit card applications will usually ask for your checking account information, and it would not look good to a lender if you did not have a checking account. Also, by establishing a checking account and keeping it in good standing, you can prove to your bank that you are financially responsible. They may take that into consideration when deciding whether to extend you credit if your credit report doesn’t provide enough information on which to base a decision. It also can be helpful to open a savings account in addition to your checking account.

Understand the factors that make you a desirable candidate for a loan, aside from your credit report/score. Lenders like to see indications of consistency and stability. Try to avoid bouncing around from job to job, or moving frequently. Creditors see people who keep the same job and residence for years at a time as a better credit risk than those who don’t.

Apply for a department store or gas credit card, if you haven’t already. These types of credit cards are generally easier to obtain than other types of cards. Just make sure that the card is reported to all three major credit bureaus: Equifax, Experian, and Transunion. Also, use these cards carefully since these types of cards tend to have high interest rates. (But do use them regularly, or they won’t help your credit!) The best way to use them is to charge small amounts on them every month or two, and pay off the card in full the same month.

Apply for a collateral loan, or have a loved one cosign a loan for you. A collateral (or secured) loan allows a lender to minimize their risk when extending credit to someone whose ability or willingness to repay a loan is questionable, as is the case for a borrower who has no credit history.

You can also have someone cosign a loan for you. If you obtain a loan with a cosigner, it still builds your credit history just as much as if the loan were in your name only.

If you can’t get a regular credit card, apply for a secured card. If even the department stores and gas stations turn you down, you can apply for a secured credit card. These cards are intended for people with bad or no credit, and they work in much the same way as a collateral loan. In order to obtain a secured card, you will need to make a cash deposit in the amount of the line of credit on the card. If you were to default on the loan, the creditor would use your deposit to cover their loss. Some banks will issue secured cards to their members, and you can also find and apply for secured cards online. These cards often come with high interest rates and fees, but it’s worth it to build a positive credit history!

Use your credit responsibly. Always be responsible with the credit that you do get. Always pay on time, and don’t carry a high balance on your credit cards. To build and maintain the best credit scoreyou possibly can, you should never use more than 30% of the available balance on a credit card at any given time, even if you pay it off in the same month.

Post from: Credit Repair and Debt Solutions

How To Build Credit

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