There isn't just one method to building credit. A credit history and a good score allow you to get low interest rates on financing deals, and people with an excellent history of managing credit can normally qualify for mortgages with no issues. Consider different techniques to help you build credit and keep a good credit rating.
Secured Credit Cards
Applying for your first credit account with a major brand such as Discover, Visa or American Express can end with disappointment if you receive a rejection letter. Acquiring credit is essential to building a credit history, but in the beginning, some credit card companies will not want to issue a card if you have no credit history. Rather than start with larger card companies, apply for a secured credit card and put down a security deposit toward the credit line. This deposit secures the credit card, which makes it easier to get one with no credit or bad credit. Banks and credit unions offer these accounts.
Use Another Person's Credit History
Building credit by piggybacking on another person's good credit history is a quick way to add years of credit history to your profile and a good credit rating. Discuss this option with a parent or spouse, and if they agree, they can contact their card company and add your name and Social Security number to the account. This makes you an authorized user, and the credit card company will begin updating your credit report with the account information. Piggybacking is useful as long as the account remains in good standing. Missed payments by the primary account holder or a maxed-out credit account can cause more damage than good.
No Credit Check Auto Loan
Buying your first automobile can also help you build credit and start off on the right foot. But instead of buying a car from a dealership that will take your credit history into account, go to privately owned dealerships that offer in-house financing. These dealers work with individuals who have no credit history, and financing a car with such dealers can help build credit. Plan for a higher interest rate on the car loan, and make sure the dealer reports regularly to the credit bureaus before buying the car.
Payment History
Paying credit accounts on time every month is an important tool to building good credit. Credit ratings improve with time, and every smart credit move you make helps improve your credit history. Keep your score within a good range (700+) with timely payments. Make payments before the due date to avoid negative updates to your credit profile and late fees.
Managing Debt
The ability to qualify for financing may prompt you to acquire numerous credit cards and other credit accounts. Debt can quickly pile up, and rather than view credit cards as a tool to buy whatever you want, control debt by only buying items that you need, and paying off new charges each month.
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