GOING FROM NO CREDIT TO GOOD CREDIT
Your credit score
is going to be one of the most critical aspects of your adult life since. Your
credit score influences almost every financial activity your are going to be
involved/dealing with. Encompassing a good credit score will label you as low
risk by creditors and therefore is not only going to mean approval for the loans
and credit that you apply for but also better rates and terms which equates to
you saving money. For example, if you purchase a new car for $35,000 and
received an interest rate of 20% on a five year loan instead of 7%, you would
end up paying over $100 more every money and more than $6000 more over the
entire life of the loan. So, think about how much money you will save with good
credit score by taking into consideration credit cards, mortgages, car loans and
everything else that is credit influenced.
If you are young and have yet to establish your credit history, you may be
wondering 'how can I get good credit?'. You are going to have start somewhere.
Below are some suggestion on how to start building a good credit history and
Take baby steps.
That means starting small by opening up a low limit credit card AND putting
a utility bill in your name. It is important that you pay both of these bill
timely and in full every month. You should also open up a bank account. Apply
for a no credit loan!
Try and rent from a landlord that will report your payment activity to all
three of the major credit bureaus.
In the past, your credit could only be negatively affected by your rent
payment history if you did not make payments in a positive manner. Therefore, if
you are in the market for a new place to live, make sure you ask any potential
landlord if they are going to be reporting your rent payment to the credit
Don't overextend yourself.
When you get your first credit card, don't max it out. That means not
utilizing your entire credit limit at one time. Every creditor is going to view
your ratio of available debt compared to how much of that debt you are using.
Therefore, maxing out your available credit lines is going to hurt your credit
score and your ability to obtain additional credit.
Also, you don't want to apply for a car loan that you are not going to be able
to afford making payments on. It is important that when determining how much you
can afford for payments that you always
for emergencies, unexpected life changing situations (illness, death, etc.),
unforeseen bills, etc.. Out of nowhere, your car loan payments can become an
extreme issue that may equate to you missing a payment or two.
Steer clear of offers that seem to good to be true.
When considering a credit card, it is important that you determine what the
big picture costs are going to be and not only introductory rates or signing
bonuses. Any initial incentive given to you for enrolling is not going to be
worth it if the card has high interest rates tied to it. Ideally, apply for two
or three credit cards and avoid retail credit cards at all expense.
Create a plan and stick to it!
Getting good credit is not difficult as long as you practice smart credit.
Maintaining good credit is also important. The key is to develop a plan and
don't sway from it.
for Those Under 21
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