Establishing Your Credit
Establishing A Credit History
In today's economy credit is a necessary evil. Although cash is still the preferred method of payment for some, without an established credit history a person will discover they'll have trouble being considered for any type of loan. Further, your credit history, fairly or not, is being used by others when making decisions that affect your life.
Judged by Your Credit History
When you're ready to rent your first apartment, your prospective landlord is going to pull your credit report to see if you'll be a responsible tenant, or perhaps to see if he can charge you more for rent because you have no credit history. When you apply for your next job, chances are good that your employer will pull your credit report as well. Like it or not, fairly or unfairly, your credit rating will influence many aspects of your life.
Your First Credit Card
There are banks that specialize in providing MasterCard and Visa credit cards to first time credit card applicants. There are others that will provide "secured" credit cards by requiring you to deposit a certain amount into an account to begin. Typically, your line of credit with a secured credit card will be equal to the deposit with these types of accounts, though you need to be careful because some of these credit card companies charge inordinately high fees that will chew up your entire deposit and along with it, your line of credit.
Department Store and Gas Credit Cards
A much easier approach to establishing a credit history is to apply for a credit card from either a department store like Sears or Penny's or an oil company like BP. These types of credit cards are much easier to get when you are just beginning to establish your credit history.
Now for the important part -- once you've gotten your first credit card, you must use it responsibly. If you begin good credit habits from the very start you are unlikely to ever run into credit trouble by over-extending yourself.
If you get a gas/oil company credit card, pay the ENTIRE BALANCE off every month. You do not want creditors thinking that you cannot handle the cost of the fuel that gets you where you need to go. Department store credit cards generally generate bad debt, but how you handle bad debt can be a good mark on your credit report. You'll certainly lose any savings (such as %10 off if purchased on store credit) gained by using the card in the first place if you let balance carry forward every month, and you'll wind up paying interest on items that have already depreciated more than 50% since the time of purchase. But, carrying a small balance does not cost you too much in interest and it shows that you can handle recurring charges.
The most important piece of advice we can give is to stay current with your bills. If although, you've reached the point where you need to settle your outstanding debt and star over, you are at the right website. Give us a call and we can settle your debt for 40% to 50% of the existing balance.
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