What’s Your Score?

This is a great pick up line but If you don’t have a credit history it will be hard to get a loan or even rent an apartment because you are invisible to lenders/renters and they have nothing showing your creditworthiness. To start building credit the first thing you need is at least one account that has been open for at least six months or longer that reports to the credit bureaus.

There are several tools to help you establish a credit history; a secured credit card, a credit builders’ loan, a co-signer on a loan or being an authorized user on another person’s credit card. Regardless of which you chose just make sure eventually you earn a good credit score by making timely payments.

If you don’t have credit and are turned down for it you will more than likely need to start with a secured credit card. These are backed by cash you deposit up front that typically matches the credit limit. You’ll use the card like any other credit card and make payments on or before the due date. The deposited cash is used as collateral if you don’t pay. After six months to a year you can go back to the lender and ask to turn this into a normal credit card and receive your deposit back. As long as you haven’t missed a payment and the card is in good standing most lenders will close the secured account and issue an unsecured card. This is not a “forever” card. It’s just a jump start.

It’s also possible to get a co-signer on an unsecured credit card but be sure that you both understand that the co-signer is also responsible for the full amount owed. Or you could be an authorized user on some else’s card. As an authorized user you can build your credit but aren’t legally obligated to pay for charges. And if the owner of the card doesn’t pay this will affect your credit as well. Also, before you’re added as an authorized user you should come to an agreement on how you’ll use the card and make sure you make timely payments even though you aren’t legally obligated.

Whether you go secured or unsecured, co-signer or authorized user make sure you get the lowest interest rate and they report your payment history to all three credit bureaus. Another option would be a credit builder loan. This is as it sounds, the sole purpose is to help you build credit. The money you borrow is held by the lender in an account and not released to you until the loan is repaid in full. It’s kind of like a forced savings account and many banks or credit unions offer these types of loans.

Or you could opt to get a small signature loan for $500 or less with a payback of at least six months. You can secure this against your savings account or Certificate of Deposit (CD) using it as collateral. The interest you’ll pay is typically higher than what you are receiving on these savings vessels but probably lower than an unsecured signature loan or credit card.

But really you can do it without credit and I can show you how. Why pay someone else just so you can borrow more? Cash is king! And you are in control!

Book a 20 minute complimentary consult and let me walk you through the process of never needing to rely on credit again.


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