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Establishing Credit - What You Need To Know Part 2
In my previous article "Establishing Credit - What You Need To
Know Part 1" I discussed the need for a good credit history and
what lenders were looking for prior to loaning an individual
money or additional funds based on their credit history. This
article will go into the necessary steps someone needs to take in
order to initially establish their credit history.
The first and easiest step is to show any potential lenders
that you actually know how to handle money. This can be easily
achieved by opening either a savings or checking account (opening
both would be better) in your name. As you successfully use these
accounts you will prove to a lender that you can handle money and
are ready for the increased responsibility that comes with having
additional credit.
Another means of establishing credit actually involves
borrowing funds and then paying them back over time without any
late payments. Although this method to establishing a good credit
history is quicker and very effective when compared to the long
drawn out procedure of making withdraws and transfers to your
savings/checking account it comes with the drawback of the cost
associated with obtaining the loan in the first place. If you're
having trouble obtaining a loan but still wish to use this method
to establish your credit history then seek out a friend or
relative with known good credit and have them cosign on a loan
for you. Remember this is asking a lot from that individual so
please don't abuse the trust they put into your ability to repay
the loan on time and without problems.
Other popular methods of establishing credit include applying
for credit cards or department store cards. Again, although this
method is very effective for establishing credit (provided you
make your payments on time) it could be costly if you start to
carry a balance on these cards. Always check to see that there is
no annual fee and make sure you are aware of the financial
charges imposed against you if you should decide to carry a
balance on any card you have. Obviously the best plan is to
always pay your balance off in full each and every month. This
allows you to build your credit history and avoid being buried
under a mountain of high interest debt.
A word of caution - identity theft and credit theft is a very
real and dangerous problem in today's society so you want to make
sure you do everything you can to protect your newly established
credit history. Always make sure to secure your credit cards and
never let anyone obtain your personal identification number
(PIN). If you have numerous credit cards avoid carrying them all
at once. Instead just carry the card you normally use and file
the rest away in a safe place. Always make sure to keep
information such as contact numbers and account numbers of the
cards you have been issued. This will help you if you ever lose
or have a card stolen.
If you find that you have lost a card or had it stolen simply
contact the company that issued the card and report your
situation. If the card hasn't been used prior to your reporting
it lost or stolen then you're relieved of any future financial
liabilities against the card. If it has been used prior to your
reporting then you may be held accountable for up to $50.
Finally, always be cautious about who you give your account
number to and remember to keep all receipts and records that are
associated with that particular card.
Establishing a good credit history isn't that difficult if you
start small and work your way up. It will take some time but if
you do it right it will definitely pay off in the future and
allow you the opportunity to obtain credit for the items you
really want to purchase or may really need.
Timothy Gorman is a successful Webmaster and publisher of
Debt-Relief-Solutions.com He provides more debt relief,
consolidation and free
credit counseling information that you can research in your
pajamas on his website.
MORE RESOURCES:
Clock ticks down on credit bureau class-action dealIndianapolis Star, United States - 49 minutes agoIn a class-action settlement, credit bureau TransUnion has agreed to provide free credit- monitoring services to millions of consumers to settle claims it ... |
MORE COLLEGE CREDITChicago Sun-Times, United States - 10 hours agoDespite the current nationwide credit crunch, the State of Illinois secured $100 million for the student loans by tapping a new source -- credit unions. ... |
Credit - Google News
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