Credit-Building Archives - Approved Consultant Solutions

Help With Building Credit

There are some tried and true ways of building credit if you are just starting out. It is often in the early days of using credit that many younger people fall into trouble. The last thing any young man or woman or just married couple needs to do is ruin their credit rating before they even get started. Here are some tips that can help you build your credit and help you stay out of trouble.

All consumers, regardless of age, must know that living without credit these days can be hard. Homes, cars, college education all require the use of credit for most people. Without sources of credit, many people simply would not be able to afford these things. Credit ratings are also used for other purposes as well, such as employment and security clearances. All in all, having a good credit record is a very valuable thing to have in this day and age.

There are actually many ways of building credit. Here are some tips that can help get you started:

You need to put your apartment and your utilities in your own name. If someone else, like mom or dad, has their names on these items they will get the credit boost, not you.

If you are working and can afford it, apply for some credit at a local store. The credit does not have to be large, and, in fact, it should be small enough that you can easily make the payments.

You can apply for credit with an oil or gasoline company as they often have lower criteria for giving credit. This can be a good way to get your foot in the door towards getting better credit cards later on.

Again, if you are working steadily and can afford it, apply for a small loan from your bank. If you get the loan, make sure that you pay each payment on time and in full. This will be a huge boost to your credit history.

You may want to apply for a secured credit card from your bank. These are credit cards that require you to put a certain amount of money into an account. Your credit limit on the card is equal to the amount of money you have in the account.

It is important that all of those creditors that you are working with report your payment history to the credit reporting agencies. This is normally done as a matter of course, but it is good to check on this every now and then just to be sure.

Once you have some accounts, it is vital that you make your payments on time and in full. This cannot be said enough as this is the leading cause of bad credit reports.

If you find that you simply cannot make a payment, contact the creditor as soon as possible and explain to them what the problem is. They will often work something out with you and if you can get the payment in quickly, they may not report the late payment to the reporting agencies.

1. Open a current account

All credit card companies like to see that their potential borrowers are responsible when given the opportunity to borrow money. However, if you only have a deposit account then there is no real chance that you could ever do overdrawn. A way to correct this is to open a current account with a high street bank and use it responsibly, i.e. don’t go overdrawn! In any event, in any application, you make to a credit card issuer they are going to ask you for details of your current account so you may as well take the opportunity of using the past history of your current account to help in establishing your credit rating.

2. Have all your utility bills in your name

A second way you can start to build up credit brownie points is to put all your utility bills, e.g. your water, gas, and telephone bills, in your name and make sure that you pay them all on time! Again, it is very likely that the credit card issuer will ask you to provide them with at least one utility bill when you apply for the card, so you may as well make use of this now as a tactic to start building up your credit history.

3. Apply for a charge card or store card

As most charge cards require you to pay off the balance in full each month, using this as a tactic to enhance your credit history is sound. Not only are you not really afforded the chance to default on a payment, but as the details are provided to several different rating agencies you can use this to building up your credit history.

4. Get a car loan

Applying for, and repaying in a timely manner, any type of loan is one of the fastest credit building tactics you can use. If you drive and know you can afford to repay a car loan, you should give serious thought to taking out a car loan – even if it is just to refinance repairs on your existing car!

5. Do a credit rating check

Once you have completed the 4 credit-building tactics above, apply for a credit report to perform a credit check. Provided you have been sensible with repaying all of your debts and bills in a timely manner, you should now have sufficient creditworthiness to apply for a credit card. In the event that you find an error on your credit report, make sure you take steps to fix this as soon as you can. Furthermore, it is good practice to get into the habit of ordering credit check on an annual basis even after your credit card has been approved to that you can keep a track of your credit rating history as this will have the biggest effect on your credit building tactics!