How to Establish Credit When You Have None

Posted by: Allie P. | Sep 26,2007

By Desdemona Bandini

You know you have reached a new level of responsibility when suddenly, quite out of the blue, you are receiving offers left and right to apply for a shiny new credit card. In the beginning, building your credit card history with thought and care will not only protect and establish your good credit, it will allow you freedoms and rewards down the line when you need to purchase larger items like an automobile or a home and want to get the best financing rate.

 

Step One: Start Small and Build

 

Establishing your credit comes in many forms other than plastic. Your cell phone bill, your utility bills, cable bills, your car payments and student loans are a few examples of bills that reflect your credit. Your ability to pay these bills on time, even at the very minimum, is a great start in building and establishing your credit history. If you have a bill, paying it on time is critical to keeping your credit healthy. If you cannot pay it in full, contact the company to find out if you can pay something lower with their permission and keep your credit intact. Often they are willing to work with you. Not communicating is bad, bad, bad. It doesn't go away, just because you didn't pay it. It gets worse. Call, work something out and be done with it.

  

Step Two: Do Not Apply For Every Card Offered To You

 

Before you gather together and fill out application after application of your stack of pre-approved or student-friendly credit cards offers, stop, take a deep breath and read the small print. There are some banks and financial lenders anxious start credit relationships with you, the new kid with no credit. However, they may want proof of employment and a potential co-signer to guarantee you are ready for the responsibility. Just because a company sent you an application, does not mean you are guaranteed a credit card.

 

By reading through the fine print and finding out what the minimum requirements are first before applying you will not only have a better chance at getting approved, but you will also avoid rejection. You want to avoid rejection. Too many rejections lowers your credit score. Before applying for a Visa or Mastercard, start with an easier card to obtain like a gas card or department store card for six months to establish a credit and payment history. Once you have some leverage, carefully pick a card to be your first credit card and apply.

 

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