How To Get Credit: No Tricks, Just Tips
Getting credit is no secret, it just takes time
Getting credit is a bit of a paradox because getting it often requires you to have it. What does that mean? Good credit, specifically a good credit score, means that you have a very good chance of getting approved for a loan or credit cards at a low interest rate, or very favorable terms. But how do lenders decide to give you credit? They look at your credit history.
Getting credit hinges on you cleaning up any bad marks on your credit report, building a credit history through responsible borrowing, and never missing payments.
Your credit history is reflected in your credit score. What exactly is a credit score? A credit score is a three digit number that describes the risk that a lender takes when lending you money. The higher your credit score the better, perfect credit is generally above 740 and means that you always pay back what you owe and do it on time.
Your credit score will determine both whether or not you get a loan but also what interest rate you pay. A higher interest rate is an expression of your risk of not paying back your loan or default. Getting credit means improving your credit score, which can’t be accomplished overnight.
Check your credit. Even if you’ve never had a credit card, you don’t know what your credit report might look like given rampant identity theft and occasional credit agency mistakes. US citizens are entitled to a free annual credit report, go to www.annualcreditreport.com to check yours. Chances are everything will look fine, but if you see activity under your name (and SS#) that you don’t recognize you need to take action by contacting the reporting agency.
Get a secured credit card. If you can’t get a credit card, a good way to build credit is with a secured credit card. You can open an account at a bank and deposit some money in it. Your credit limit for that card becomes the amount in that account. In the event that you don’t pay your bill on time the money gets automatically deducted from that account. This is a secure way for banks to lend to someone with little or no (or bad) credit history.
Plan your finances. Getting credit is dependent on good money management. If you handle your finances responsibly, pay what you owe, keep the balances on your cards under 80% then you are on the road to good credit. Register with a financial guidance provider like HelloWallet to put your finances in order and keep them that way. HelloWallet offers a risk free trial for 60 days.
HelloWallet organizes your financial information by securely downloading your account data. You get a complete picture of your finances and can set unique goals like saving for college, putting aside money for a secured credit card or loan, and much more. Get credit with expert help, join HelloWallet and let us help you to build a higher credit score and financial fitness!
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