If you have no credit score, getting one is easier than you think! Whether we like it or not, our world revolves around credit. If you don’t have a credit score or have little credit, it affects your mortgage rates and about a trillion different other things. You might wonder where to start…so I am going to tell you!
1. Get a secured credit card. You can get this from a bank and I have also seen places like Capital One have them. A “secured card” basically means that YOU give them $500 as a bond to hold onto and they give you a card with a $500 limit. It is really hard NOT to get approved for this type of card because they are basically giving you credit against your money.
The key though is this: DO NOT charge the card up the whole way and then just keep doing that and paying it off. If it has a $500 limit, be sure never to have a balance larger than 30% of that limit.
2. If willing, have someone that you know put you on as an “authorized user” on one of their credit cards. Now, the person that you want to do this will have to have excellent credit and will optimally have a super low balance on their card that they have had for a long time. You do not want to pick someone who is irresponsible with their credit because that won’t help you! The reason why having someone putting you on as an authorized user works is that their card – a card that they have had for a while – will go onto your credit and it will lengthen the amount of time that YOU have had credit for…which will, in turn, boost your credit score or even give you a credit score when you didn’t have one.
3. Take out a small installment loan. This is good because it is best to have a mix of different kinds of credit. Only do this though once you have revolving credit established. From what I have seen, installment loans alone on credit don’t really help at all unless you have revolving with it.
4. Once you have done the above, you should have a score within 45-60 days…and then you can start establishing other kinds of credit like a few other cards and maybe even a mortgage one day!
The key is though….BE RESPONSIBLE. Just because you have a credit limit, doesn’t mean that you should ever max it out. That is how BAD credit happens. Keep your balances low and make sure you pay everything on time. Also be careful of how much credit you apply for. Do it slowly and be very choosey about who you apply with. Too many inquiries will hurt you.
That’s all I got for today!
Jen