How Can I Go About Establishing Credit?

When you want to borrow money, you have to have an acceptable credit score in the eyes of the lender. Before you can get a decent credit score, you have to start the process of establishing your credit history. When you start out your adult life, you most likely have no credit history, and the proper steps must be taken to get the process started.

Open Bank Accounts

One of the easiest steps that you can take is to open bank accounts in your name. You should consider opening both a checking account and a savings account with a local bank. As long as you are over the age of 16 in most areas, you should be eligible to open a checking account. When you get your accounts open, you can start using the checking account to pay for things that you need. A good payment history will start to help you build credit.

Credit Cards

One of the most effective ways to build credit is to open a credit card account. Most credit card companies are willing to open a credit card with a small limit for you. Once you open a credit card, you can use it to make some small purchases. As soon as you make a purchase with your credit card and receive a statement, you should pay the bill off immediately. This helps your payment history and makes it look like you are responsible with money.

Be Responsible

If you want to establish good credit, you have to be responsible with your money. This means that when you use your bank account, you need to always have the money to cover the payments in your account. You have to keep track of how much money you have in your account at all times. When you use your credit card to make a purchase, you have to make your payment on time the following month. If you make late payments, it hurts your credit.

Store Accounts

If you have trouble getting approved for a regular credit card, you may look at opening some store accounts. For example, you could open an account with a retail department store and make some small purchases. Another option is to apply for a gas card with a gas station. These items are usually easier to get approved for than a regular credit card, and they also report to the credit bureaus on your actions.