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In This Chapter:
How To Establish Credit
Tips on how to establish credit, online credit card finders, credit card search, unsecured credit cards, avoiding scams.
The key to establishing credit or to re establish credit is
not to let potential creditors take advantage of you because you have not
established credit yet. The best way to establish credit is with low cost
purchases. This will ensure that you have the ability to pay off the bill. If
you have no credit history or have a bad credit history, anyone that gives you
credit may charge you 21 The offers for 5% interest credit cards you get in the
mail may not come to fruition for you once you fill out the application and mail
it in. You aren't in a position to be choosy. We don't recommend using a
department store card as a starting point to establish credit because they
charge 19-22% interest. Always verify the interest rate of any card you sign up
to first. Gas cards are just as bad, but as long as you only use them to buy gas
and pay them in full (typically $60 per month) when the bill comes, you won't
pay any interest. This will help you establish credit from the ground up, while
at the same time getting you in the habit of paying all your credit cards in
full when they arrive.
Part of maintaining good credit is knowing what your credit score is, so make
sure you get your credit score.
Sites to get your online credit report
The top site to get your credit report from is
Equifax. This site allow you to get your online credit report instantly.
Be sure you choose the option that gives your credit score too. These sites are
reviewed further down the page.
Now is the time to get your credit credit report
Don't put it off until later, you'll be sorry. Do it now before you even finish
reading this page, so you can find out what your score is, and begin your first
steps to improve it. It takes 30 to 60 days to get issues with your credit
history resolved. For more information on credit scores, and credit reports,
read the chapter: How
To Get Your Credit Report, understand and improve your credit score.
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Before you do anything to establish your credit be sure to open a checking account. You will need a checking account to pay your bills
and it is a good way to show that you are financially responsible by not overdrawing your account.
Family: Your own family may be able to help you establish credit. Use family money as a down payment on a loan and finance
the rest yourself. Since you will be paying a large down payment it will increase your chances of getting a first loan.
SCAM ALERT:
If you have not established credit and are buying a car make sure to read this. Many dealerships have first time buyer programs or graduating college senior
programs subsidized by the car manufacturer. Some dealers may claim they have a first time buyer program, when there really is not one and they are just charging you
18% APR. If you have a good credit card history, there is no reason to pay 18%. They are feeding off your lack of knowledge and fear of rejection. As a first time
buyer you have all the negotiating rights that I do, and don't let any salesman tell you otherwise. Just keep shopping for a dealer who is willing to work with you.
You may not get the car you wanted, but at least you won't be paying double the interest. Also, first time buyers get caught up in the euphoria of buying a new car,
and because they are naive, are easily persuaded by salespeople to buy all the extras, or even pay full MSRP. Welcome to life in the real world.
College Students:
If you are making a high priced purchase such as a car and need to establish credit don't let you self be ripped off by a salesman who offers to give you a
"great opportunity" to establish credit by charging a ridiculous APR. If you are a student working at the university, you may be able to get a loan through the
credit union. Try there first, it could be the best place for you to establish credit. Some college students, when buying a car, have their parents just buy it
for cash. This is good, but does not establish credit for you. You might be better off having them put down a sizable chunk of cash, then you carry the remaining
small loan balance. When you finish paying off the small loan balance, you have established yourself as a creditworthy person, and should find it easy to get credit
later on, and more importantly, at a lower interest rate than 18%. Having a credit card under your parents' name does not establish credit for you.
Try the Discover® Student Card to establish your own credit.
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