Establishing Credit When You Have No Credit History
By Delia Galley
It’s a catch-22. You need a line of credit
to build credit but since you don’t have credit,
no one wants to extend you a line of credit.
Increasing credit card companies are offering
credit cards to college students on campus.
I acquired my first credit card when I was
shopping at the campus book store for a used
book. My first credit card, a MBNA Visa, had
a credit limit of $500. Enough to keep me
out of trouble but also enough to start building
my credit history file.
Here are three strategies for building
or rebuilding your credit file.
1. If you have no credit, you can start
building credit by applying for a secured
credit card. A secured credit card is
a type of credit card that requires you
to open and maintain a bank savings account.
The money in the savings account is used
as security against your line of credit,
in case you default on any payments. Your
credit line is usually 50% to 100% of
the money in the savings account.
2. Another strategy to building credit
is to apply for an unsecured credit card.
An unsecured credit card is a type of
credit card that does not require you
to secure the card with a savings account.
This is the traditional credit card that
you’ve come to know. You can apply for
a "no credit history" credit card.
3. If you are having trouble applying
for an unsecured credit card, ask a family
member to be a cosigner on a credit card.
To increase your chances of getting an
unsecured credit card, do the following:
* Apply for cards that are suitable to
your financial status. Card issuers have
a target demographic or people they want
to offer cards to, for each credit card
product. Some creditors only want customers
with perfect credit.
* Open a checking or savings account
in your name. This lends credibility to
your financial status.
* Don’t overdraw or bounce any checks.
Better yet - leave the money in the account
and let it be. Most banks will let you
open an account with $250 or even less.
* It helps to have a phone number or
utility in your name.
Following these basic steps should land
you on the road to perfect credit in no
time.
Delia Galley writes about consumer debt
counseling. Find additional resources
about unsecured and secured credits at
http://www.poorcreditgenie.com.
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