If you are trying to establish credit you may be overwhelmed by all the information there is out there. You may be uncertain about how to establish credit or even where you need to go to apply for credit. Sometimes the confusion of finances, credit and what can seem like mountains of paperwork may tempt you to throw your hands up in the air and give up on establishing credit but that is simply not the answer. In today’s credit driven world it has become important for any adult who will be making financial decisions to have access to their own line of credit. So if you are working to establish credit here are some of the best places to apply for credit if you have none-
• Your bank-The bank or other financial institution you do business with may be the best place to start in your quest to establish credit. If you have not already open a checking account. While opening the account does not directly build your credit, it does create a relationship between you and the bank by being an accountholder. Banks love to cater to their preferred customers that have accounts in good standing by offering loans and credit cards. Also, by having a checking account it not only helps manage your money, but it gives you the most powerful tool in building credit, a checking account to help pay your bills on time. Most banks and credit unions will offer online banking with billpay that can make it easy for you to pay your bills on time, which is important in building credit. Any bills that are reported to credit reporting agencies will be judged by how timely you pay your bills. Your bill paying timeliness will make up the majority of your credit score so be sure and make this a priority.
• Open secured credit card- Secured credit cards can be the easiest credit cards to get, mainly because a security deposit is placed upfront in order to establish a line of credit in the same amount. For example, if you deposit $300, your credit limit is $300, etc. The deposit will not be used to pay for any of the purchases on the card unless, it was charged off and sent to collections. You would have to repay the card just like a regular card either in full or minimum monthly payments. In addition the deposit is sometimes linked to a savings account, so it earns interest while you are building credit, so the deposit is not just sitting there. You can think of this as building credit with a savings account. This can work well toward your credit history since the more you deposit, the higher your limit will be which is good for your score because it creates a cushion between the total debt you owe and the credit you have available. Another benefit is by continuing to add to the deposit, you are also creating an emergency fund at the same time. A good way of using the card is by making small purchases ($20/month max) and paying on time every month while continuing to add to the deposit. Usually after a specified period of time the card either converts or upgrades to a regular card, and most importantly, the deposit is given back, which you can place in a savings account as an emergency fund.
• Open a credit card at a local department store-This is usually an easier card to get but often at a much higher interest rate. This can be a good place to establish credit if you keep your purchases under control and make your payments on a timely basis. Just make sure that the card you open will be reported to a credit bureau since you need that information in order to establish a credit history.
• Enroll with PRBC- This organization is America’s Alternative Credit Bureau, which provides a helpful service to the over 50 million people with limited or no credit history. If you pay your monthly bills on time, PRBC can help you build credit to qualify for a mortgage and better interest rates.