Having a good credit report is important, however, many times it is hard to establish credit if you are just starting out. If you are just starting out and are finding it difficult to get approved for financing, there are steps that you can take to establish new credit. Once you establish credit, work hard to keep your accounts current and avoid a negative effect on your credit score.
Borrow someone else’s credit. A good way to build your credit report is add yourself as a joint account holder on someone else’s account. If you have someone that is willing to let you use them as a co-signer, get a loan with their help. This can help you get approved for a loan that you may not have been able to get on your own. Not only will this help to build up your credit report, it will boost your credit score. Be sure that you pay the loan on time because the co-signer’s credit will also be affected if you make late payments.
Apply for a school loan. If you are taking college courses, applying for a school loan is an easy way to build your credit report. Students can get approved for school loans without their credit status or credit score being a factor. Once you start paying on the loan, it will add points to your credit score and give you good credit history.
Apply for a secured credit card. Most people can get approved for a secured credit card even if they don’t have previous credit history. A secured card requires that you deposit money into an account and this amount determines your spending limit. A secured credit card lender is willing to approve the card because the deposit is collateral. Payments made on the card are reported to the credit reporting company and can help to build your credit report.
Avoid late payments once you have obtained credit. With most creditors, a payment is considered late if it is 30 days past due. One late payment can lower your credit score more than 50 points. If you want to build your credit report, make payments on time. If you think you may need more time, contact the creditor and ask for an extension on the due date. Many times a creditor will grant an extension without reporting the payment to the credit reporting agency as late.