Establishing Credit

One of the biggest issues that seem to plague people who are just getting started establishing credit is the old catch-22 of needing credit to get credit. If you have no credit history, it can be very difficult to get anyone to give you credit.

But there are plenty of ways to get credit if you have no credit history. You just need to be sure that you’re actually getting accounts that you will use appropriately and that you aren’t just getting accounts for the sake of establishing credit.

For example, there is a certain jewelry company that will give absolutely anyone a credit account. They report to all of the major credit bureaus, and they let you make very low monthly payments. It sounds like a dream come true, right?

Unfortunately, there is a catch. The jewelry they sell is extremely overpriced, and it’s also known to be low-quality, shoddy merchandise that could fall apart and isn’t as attractive as it looks on their website.

They also require a hefty down payment, usually enough to cover the actual cost of the item. The payments you make are just stuffing their pockets with loads of your hard-earned money each month.

Another common way to establish new credit is to get one of those “bad credit” credit cards. They carry very hefty interest rates, and often you will have to pay $250 to get a $300 limit. When you receive the card, you’ll find $250 already charged on it in “fees” and only $50 or less available. These fees, along with annual fees and exorbitant interest rates, will eat a hole in your pocket quickly!

There are ways to establish credit without resorting to such extreme measures. Buying a car is a good way to establish new credit. Opening a store account with a local store may also work, just be sure to ask if they report timely payments to the credit bureaus.

You can also ask your bank about secured credit cards. They will often report your payments to the credit bureaus, and if you make your payments on time for a while they will often refund your deposit and give you an unsecured card.

Author : C Michaels
Source : enzinearticle.com