How to Establish Credit

Video Transcript

"How to establish credit--now this can also apply for someone who is trying to re-establish credit. First way for you to go naturally would be to talk to immediate family members if you have nothing showing up on your credit reports. And you've probably applied for credits and you have been turned down by either credit card company or whatever other the type of lender you've approached in terms of trying to get a loan for a car, credit card or anything else. So now advice would be get in touch with your immediate family member, brother, sister, parents and whoever established credit and discuss with them how they can add you to maybe some of the credit card that they have that they are using as an authorized user which means then that a credit card will be presented in your name, your social security number will be on there, so they will be responsible for it, but it still will be showing and reporting on your credit report on a monthly basis. Because all of the sudden the history that they've established automatically appears on your credit report. So that way you can go ahead and apply for your own credit, your own credit cards, or anything else and start establishing your credit that way. Now that's obviously one way that you can go, by contacting or working with your immediate family member. Alternate way would be to apply for credit but use some of your immediate family members as co-signers or co-borrowers, rather than going on their credit reports. The last but not the least would be applying for a secured credit card. Walk into a bank that offers that, unfortunately not all financial institutions offer those. But walk into, do your research, figure out the ones that do offer them. And walk in there, fill out the credit card application, which is for a secured credit card, and what you do on that point is you're bringing in some cash. It could be $200, some banks actually have a minimum of $200 or $300 that you need to put down to kind of secure this credit card and then you can starting using it just like a normal credit card, and over time, your money would be given back to you and then it would become an unsecured credit card and slowly but surely over time the credit limits just keep on getting increased and there you go, you've already started establishing credit and you will be good to go."