No one needs to be told how important credit is in today's times. Having credit means that there is security at all times. It also acts as a prerequisite when applying for a credit card, home loan, education loan or any other expenses. While paying cash is possible in many situations, it is not really feasible when it comes to major expenses like buying a house, etc. And that is why it is important to have credit. If you aren't too sure about how to get there, then this article will tell you about the ways in which you can build credit.
Building Credit from Scratch
So you have no credit and you need to learn the different ways to build credit, correct? The following pointers will help you through by giving you some ways on how to repair the credit fast, though some of them aren't exactly quick fixes, because at the end of the day, you do need to pay a little for your bad credit score:
Get a Bank Account
This is essential when it comes to any sort of financial dealing. Along with that if investors or companies are to extend any credit to you then they are more likely to do so if you have a bank account. This is because it denotes stability in finances. They will lend credit to you only if they are sure that you have a steady income and are used to handling your own finances. This can only be shown through a bank account.
Get a Secured Credit Card
A secured credit card is a great way to get the feel of a credit card. Always avoid using unsecured credit cards to rebuild credit, because they have no collateral backing the line of credit, but in secured cards, you are borrowing against your own funds and therefore it is not as difficult to get an application. The only thing that one needs to do is pay the money on time and keep the balance in check. If this is done without a glitch, then the company won't delay you from getting a regular credit card. Even a student credit card is a great start.
Apply for a Loan
Having a loan is counted as having installment credit and is one of the better ways of working to get real credit. A loan means that you have borrowed money that you are looking to repay with interest and in a stipulated amount of time. This shows that you have the ability to pay back the borrowed money and that you have the experience of handling such forms of payments. The best loans to get are student loans because they are easy to obtain and the interest rate is lower.
Get a Co-Signer
Get someone who has a successful credit history to co-sign the credit application with you. A successful credit history would include a person who has a low-balance history and an on-time payment strategy. When you're adding them as a co-signer, you can 'borrow' their account image and this makes it possible for you to qualify for loans that you normally wouldn't have. When you get a loan, make sure that you pay this responsibly or else it will put you and your co-signer at risk.
On Time Payments
Nothing will hurt your credit more than non payment of bills. Make sure that you pay the bills on time even if it is the most basic and minimum amount payable. This shows that you are regular. Along with that make sure that you keep your balances at 30% or less and have lots of credit to display. This makes a very good impression on the credit bureaus.
Keep the Job
Having a steady job that allows you to have a steady growth in income makes for a great premise to allow credit cards. If on the other hand a person has changed jobs often and has erratic salary counts then that is not an ideal situation to be in.
Building Credit After Bankruptcy
What if a person has become bankrupt and wants to know the best ways to build credit after bankruptcy? Here are some pointers to help out:
- Learn from your mistakes and do not repeat the same mistake, because whatever the reason, bankruptcy is like poison to your credit score.
- Get a job and stick to it. Consciously try and save money so that a fund can be built over time.
- Budget all your expenses so that you have an exact knowledge of how much you're spending and saving.
- Pay your bills on time to set the records straight.
- Get a secured credit card or even an unsecured card (as mentioned above). Even though this is difficult, owing to your condition, some creditors might consider you a risk worth taking because there is no more danger where bankruptcy credit is concerned.
- Don't buy anything expensive until you have a history of good credit repair built for yourself.
- Do not fall for any scams that will promise to fix your problems. It's not possible to mend the situation overnight so understand that and work with patience. Overtime, things will get better.
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