You know if you’ve tried to apply for credit without any previous credit history that it’s almost impossible to do. In order to build credit you have to have it, and in order to have credit you have to qualify for it. It seems like a vicious cycle where anyone without credit will never be able to jump into. If you are one of those frustrated individuals then here are some ideas on how to start building credit.
• Gas cards and Department Store cards can be a great way to starting building credit. While you will not be able to use them everywhere you can still use them in the store or by just getting gas. These types of credit cards are much easier to qualify for and can really help boost your credit scores; as long as you continue to pay off the balance that is.
• Student credit cards can also be a great way to start building credit. There are many banks that off special student programs and make it easier for college students to qualify for a credit card. Citibank and Chase are among some of those banks that have some special programs and offers available to students.
• You can often build credit by purchasing a CD and then using it as collateral for taking out a loan with the same bank. There is no risk in it for the bank so the terms should be fairly reasonable.
• Co-signing on a joint account can also offer you a way to build credit; actually one of the best ways. Although it is not as valuable as having your own card, it can still help improve your credit scores and give you something to start with. You have to be careful though who you have a joint account with. Make sure it is someone you completely trust in being responsible with their money and making on time payments. If it’s not, it can end up hurting your credit more than helping it. And the same goes for you. As a joint account holder on someone else’s card you had better make sure that you can pay for the things you will be purchasing on it.
• If you have already opened a checking and savings account with your bank you should be able to sign up for a secured credit card. Secured credit cards work much like a regular credit card in that you can use them wherever you would use a regular one. They differ however in how the money gets onto the card. It’s called a security credit card because it is secured by how much money you deposit onto it. The money you deposit onto the credit card is then used as your credit limit. You can use it anywhere you would use a regular credit card and it can help you build good credit. The best part about this card is that credit bureaus have no way of knowing that you’re using a secured credit card. So make sure if you sign up for one of these that you tell your bank that you want all your transactions sent to the credit bureau but don’t want them to know it’s a secured card. The other great thing about this card is that it’s hard to go over your limit. Since you are the one putting money on the card chances are you won’t put more on than what you can afford.
• While there are some words of caution to be said about businesses that offer merchandise on a rent to own type of loan, if used appropriately it can help build your credit. Some stores allow you to finance merchandise with them on things like 60 days same as cash, or 12 months no interest no payments, etc. These can help your credit score if you actually have the money to pay them off in the allotted amount of time. If you don’t you’re in for trouble, as their interest rates are sky high and you’ll find yourself in a world of hurt.
These are just some ideas on how to start building credit. There are others out there; talk with family, friends, lenders, and your local bank to find a way to start building credit.