Building a Credit History

By: Dewey Kearney

Have you ever applied for a loan and been turned down? I have and I remember my feelings at the time. I was embarrassed, angry, hurt and just plain mad. I had been on my own for several years, always paid my bills on time and felt that somehow I had been severely wronged. Those were the days before credit cards were as easy to get and it was harder to establish credit than now.

It is important to establish a credit history before you actually need that loan, and it is easier than you might think. Consistently paying your rent, utilities and phone bill on time just won't do it; you could still be turned down for a loan.

One of the simplest ways to establish a credit history is through credit cards. Do you remember the first credit card you got, I do and boy was I happy. I felt like somehow I had arrived or hit the jackpot. It didn't matter that the limit was only $250 and the interest rate was 24%. A credit card is much simpler to get than a loan but if you use it wisely and don't go crazy and purchase everything you see you will be pleasantly surprised with the results.

In fact if you want this to have a POSITIVE effect on your credit score keep your charging to 25 - 30% of your limit. DO NOT MAX your card out as this will have the opposite effect. This is your opportunity to prove to the world that you can act responsibly.

Here are a few simple tips to get you started building a good credit history.

?Everyone gets credit card offers in the mail. DON'T apply for every one that you get. Applying for many credit cards in too short a time can damage your credit score.
?A good place to start is with your credit union or bank where you have a checking or savings account. If you have a savings account where you regularly put money in they will be more comfortable giving you a card.
?Most people with no credit history will not be able to get a credit card with a big credit limit and yours will be no exception. You will have a small credit limit - don't max it out just because you can.
?Be sure to make your payments on time. Late payments will lower your credit score and will stay on your record for years. Also if you only use it to make small purchases it will be easier to pay it off every month.

What if you are having a hard time even being accepted for a credit card? Don't panic; there are still ways to start building your good credit history. Here are a few ideas:

?Ask your parents about adding your name as an authorized user on their card. Check to be sure that their credit is good though for obvious reasons. If your parents won't or their credit history isn't so hot see if you have a friend who will help you out. One other thing, the person who is adding your name will have to ask their lender to be sure it is credited to your history. Some lenders only report if the authorized user is married to the primary holder.
?Apply for a credit card on our site. Our link is below in the resource box. You may be pleasantly surprised at how easy it is to qualify.
?Get an in-store credit card. Many of the major chains have a card that can only be used in that store. This type of card reports to the credit bureaus so this will help you build your credit. The most important thing of all this is: don't get too many credit cards at once or it can damage your credit history.

Getting a credit card is one of the best ways to establish your credit history. Get your GOOD credit history in place early and you will have nothing to worry about when you need that loan for a car or home.

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