Tips On Establishing A Credit History

Tips on​ Establishing a​ Credit History

Establishing a​ credit history is​ one of​ the​ most important things you​ can do for your future .​
Your credit history will follow you​ through your entire life,​ affecting your loans,​ insurance premiums and even employment opportunities .​

When you​ have a​ good credit history,​ you​ receive lower interest rates,​ better repayment terms and have an​ easier time apply for a​ loan .​
If you​ have a​ poor credit history,​ you​ will have a​ harder time finding credit,​ be subject to​ higher interest rates and pay higher insurance premiums.

Think of​ your credit history as​ your track record for borrowing .​
Your credit history tells the​ lender whether or​ not you​ can repay a​ loan on​ time .​
When you​ apply for credit,​ the​ lender will contact one of​ three major credit reporting agencies: Equifax,​ Experian or​ TransUnion .​
Each credit bureau keeps a​ record of​ your credit history,​ which is​ supplied by your lenders .​
Your credit report shows how much you​ borrow,​ when you​ borrow and your payment history.

Start by establishing a​ good credit history .​
You can do this if​ you​ have never borrowed money or​ if​ you​ are trying to​ repair a​ poor credit history .​
Establishing credit takes time,​ patience and wise decisions .​
The key is​ to​ start out with good credit .​
If you​ don’t,​ it​ will take a​ long time to​ rebuild your credit.

Open a​ Checking Accounts

A good banking history is​ the​ first step in​ learning how to​ manage your money .​
You are forming a​ relationship with a​ bank that will help you​ in​ securing credit in​ the​ future .​
Manage your account wisely,​ avoiding overdrafts .​

Take Out a​ Secured Credit Card

Secured credit cards are recommended for new borrowers .​
You receive a​ credit card in​ return for a​ deposit in​ the​ amount of​ the​ credit limit .​
The deposit is​ collateral for the​ credit .​
The bank will use the​ deposit to​ pay your debt if​ you​ default on​ the​ card repayment terms .​

You use a​ secured card in​ the​ same way as​ a​ regular credit card .​
You can pay off the​ entire balance each month or​ make minimum payments .​
You must make your payment on​ time .​
Late payments will not only raise your interest rate and cost you​ in​ late fees – they will damage your credit history.

Use a​ Gasoline Or Store Credit Card

Many gasoline cards do not allow you​ to​ carry a​ balance from one month to​ another,​ making them a​ good choice for beginners .​
They are easier to​ obtain than regular credit cards .​
You can also take out a​ store credit card for use at​ a​ specific retail stores .​
Gas and store cards have higher interest rates,​ but are a​ good step in​ creating a​ credit history.

Co-Sign on​ a​ Loan

You are able to​ establish credit by co-signing on​ a​ loan .​
For example,​ your parents may allow you​ to​ co-sign on​ a​ car loan .​
This gives you​ the​ chance to​ build a​ credit history without being subject to​ high interest rates .​
You should be cautious when co-signing on​ any loan .​
By doing so,​ you​ are responsible for the​ loan .​
If the​ other person fails to​ make a​ payment,​ it​ will show up on​ your credit history as​ a​ late payment.

Use Your Credit Wisely

Don’t randomly apply for credit cards and loans .​
Make your decisions based on​ interest rates and terms .​
Each time you​ apply for credit,​ an​ inquiry is​ noted in​ your credit history .​
If you​ have too many inquiries,​ lenders will become suspicious of​ you.

The key to​ establishing a​ good credit history is​ to​ pay all of​ your bills and loans on​ time .​
Each late payment will count against you​ .​
Unpaid medical bills,​ utilities and bank account overdrafts can also negatively impact yourcredit report and scores.

Lenders and credit bureaus take a​ great interest in​ your ability to​ repay your debts .​
Take the​ time and effort to​ establish a​ good credit history .​
It will help shape your financial future.

Tips On Establishing A Credit History Tips On Establishing A Credit History Reviewed by Henda Yesti on December 24, 2017 Rating: 5

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