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Credit Building from Scratch

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True that it is hard to obtain credit when you don’t have credit to begin with. But building credit should not be that too difficult if you know the right places and resources to help you out. These tips can help you start on establishing credit without much difficulty. 

Open a savings account

A good place to drop by if you truly want to start building your credit is at the local bank. Open a savings account wherein a portion of your salary automatically goes to. Not only is this helpful in building your credit, but it helps establish that financial discipline that you will need once credit is obtained.

Obtain a secured credit card

It will definitely be challenging to get your first credit card if you have no prior experience, but applying for a secured card can make the task that much easier to accomplish. These cards require security deposits and tend to have lower credit limits which is why they are easier to qualify for. Preferably, start with the bank that you’ve opened a savings account with. Since you’ve already done business with them and you currently have an open account with them, this will give them more confidence in you.

Get a cosigner

If you can’t get a secured credit card b yourself, consider asking the help of a cosigner. If someone with good credit will be willing to serve as your guarantor, it can increase your chances of getting approved for the credit application.

Apply for Store Cards

The next thing you may want to consider after getting your first secured card is to apply for department store or gas cards. Not only do they help build your credit, but they can be a great way to take advantage of discounts and offers on purchases that you already make regularly. However, in applying for these store cards, make sure you understand their terms and do not apply for stores that you don’t regularly shop in.

Apply for unsecured credit card

You shouldn’t stay on a secured card forever, especially if enough time has passed and you have proved your credit worthiness. If you’ve shown consistency in making your payments on time and paying off your balances in full, it’s high time you apply for an unsecured credit card to get better terms and lesser restrictions. After about 12 to 18 months of positive payment history, you’ll likely qualify for an unsecured card.

Sign up for utilities under your name

Since utilities are basic necessities and you’ll need them anyway, try to have these services under your name even if you’re living with someone else. Something as simple as paying your mobile or internet bills can give your credit a boost.

Apply for other types of credit

A considerable portion of your credit score is determined by the mixes of credit that you keep. Aside from credit cards, it would be very useful if you have other types of installment loans in your account, such as auto or mortgage loans.

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