How To Establish Credit

So you’re ready to establish credit but wondering what steps to take in establishing credit. Well, you have landed at the right place. I am going to show you a variety of ways in which you can start getting some new credit.

But before I give you the different methods you can use to get credit there are a few things you need to understand.

First and foremost you will not be getting the best deals out there for this simple reason, you don’t have any credit. In other words you are not going to get the lowest interest rates on anything you apply for. Sorry, it is a fact.

Secondly, establishing credit takes time. You are not going to have a high credit score right off the bat. After getting approved for credit you will more than likely be hovering around the low 600 hundreds for a credit score. Not bad and it will improve over time as the credit seasons.

Okay, now that we have that out of the way here are the simple things you can do to establish credit.

4 Simple Ways To Establish Credit

1. Get a credit card. Simple enough right. It is pretty darn easy to get approved for credit cards even if you have no credit. What you need to understand is that there are a variety of options when it comes to these cards.

Unsecured credit cards are ones in which you literally are given credit. In most cases if you are establishing credit you will see charge limits in the $250 to $500 realm.

Secured credit cards are those in which you actually put up a certain amount of funds in exchange for charging ability. The funds required for the deposit will vary. For example you may only need to put up $100 and get a $500 card. It all depends. With secured cards you are guaranteed approval which is obviously the best way to go about establishing your credit.

Store charge cards are another way for you to establish credit. These will also have various options as well. Some cards will only allow you to charge stuff from there store. Other will be true credit cards in that you can use them anywhere you want. Either way these will help you establish you credit.

2.  Personal loans from finance companies. These are loans that will finance the purchase of consumer products such as TV’s or stereos or washer and dryers etc. This is actually how I first established my credit. I was in college and used one of these companies to buy a big (loud) stereo for my dorm room.

3. Secured loans are another option to establish your credit. If you own a vehicle, boat, RV, ATV, motorcycle etc. you can usually get a loan on these items from your bank or credit union. The thing to keep in mind is that you do not want to pay this off right away. You need to keep this loan for at least a year. At that point you will have established some good credit and will have other opportunities available. 

4. Talk with your banking professional. Just go into your bank that you have your accounts through. Tell them that you are trying to establish your credit and are wanting to know what products they have available to make this happen. You will be pleasantly surprised at what they have available.

It could be checking account overage protection. It could be credit cards. It could be secured loans. It could be title loans. Heck you may even qualify for a home loan. (Yes you can buy a home even if you have no credit) But you will never know until you go in and talk with someone.

Some Final Thoughts About Establishing Credit

There are other ways for you to establish credit. But they are more difficult and are not worth the risk. The options presented above are more then enough to help you establish you credit rating.

A few things to know before you apply for credit from anyone including your bank. First make sure they will be reporting your credit history to the credit bureaus, preferably all three. Second make sure you pay attention to the fine print. I know you really want credit but it is not worth paying ridiculous fees in order to get it.

There you go. You can no longer ask yourself “How To Establish Credit” because you now have the answers you need. Good luck in establishing you credit.