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Make sure you pay
off all your payments on time to avoid big fees and help build your credit.
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If you always paid
all your bills in cash, you may get turned down when you apply for a loan or
unsecured credit card.
The reason is simple: never having used credit before, you have no credit
history and therefore no credit rating. This may seem unfair as chances are
you have managed your money efficiently. Nonetheless, in the eyes of
lenders, paying in cash doesn't make you a good credit risk. |
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The same problem sometimes
afflicts people who have only recently started out on their own financially:
recent college graduates, for example, or newly divorced women.
Fortunately there is a simple solution. Get a credit card, use a few times
a month, and pay your bills promptly. After six months or so, you will have
established a credit history which will help build your credit. So if you
know, for example, that your interested in buying a home and therefore will
need a mortgage in the next year or two, take the steps necessary to create
a good credit history for yourself.
If you have a bad credit record. A secured credit card is a good way of
going about cleaning up your bad credit history.
How Does A
Secured Credit Card Work? |
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A secured credit card is
backed by your personal savings. Unlike a unsecured credit card you will need to
make a deposit before receiving your card, this can be submitted instantly
by including your bank details when completing a secured credit card
application. Once a deposit is made to a secured credit card your deposit
is safe and also makes monthly interest. The secured credit card is then mailed
to you typically between 5-10 business days.
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Credit may vary between cards but is usually around 20% of your total
deposit - So if you were to deposit $500 you would receive a credit line of
$600.
You can use a secured credit card for virtually all purchases. Providing
you make your payments on time, the growth of your credit will get reported
to all the main credit bureaus every month. Then before long you will have
established enough credit to receive a unsecured credit card or loan.
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registered trademark. |
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