What is the best way to establish credit? Your credit score is used to evaluate your payment history for new potential lenders.
In a nutshell, it is your reputation for repaying your debts, and it builds trust with lenders. Your FICO score builds slowly so it is beneficial to start accumulating a positive history as soon as possible. It’s important to pay your bills and avoid collections.
The first thing you will want to do is check your credit report with the three main bureaus: Experian, Equifax and TransUnion. The things you need to look for are collection accounts and score. If you have a bad rating, don’t fret, because there is plenty of time to fix it by paying off any outstanding debts.
When you apply for a credit card, many cards will ask if you have a checking account, savings account or both. Make sure you have both set up before appying. If for some reason you are unable to get credit, look into something called a “secured card.”
Make sure the secured card has a Visa or Mastercard logo. There are several companies that offer credit but they do not report to the bureaus. Some banks require you to make a $200 deposit, which you will use as your credit. A secured card is not a “prepaid card” that you find in stores.By: Mary Smith
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