Credit is a necessity in today's financial world. You need a credit history to get things such as a car loan or a mortgage, but too much debt can send you into difficult financial times or even bankruptcy. However, there is a responsible way to have credit cards for the purpose of building credit. Whether you've never had credit before or are recovering from poor credit, you can use credit cards to establish a positive credit history.
Step 1
Ask a family member to add you as a user to one of his current credit cards. It's important that you're added as an authorized user so that your use of the account and the credit history already built on the account is shown on your credit report. This will help you build credit without even having a credit card of your own.
Step 2
Apply for a secured credit card. You will need to open a new bank account and deposit $200 or so to back up your new card. You can't spend more than this deposit, and you will still be required to make payments on time each month to keep the account in good standing. This will help you build credit slowly, but within a few years, you'll likely be able to switch the card over to an unsecured card or apply for an unsecured card from another bank.
Step 3
Try applying for a credit card with a low credit limit. Accept that you'll likely have to contend with a higher interest rate. If you make small purchases on this card and pay at least the minimum balance each month, you'll establish a credit rating for your use of the card and start to build a positive overall credit history.
Step 4
Don't forget to pay your bill every month. If paying by check, send it in at least a week in advance to allow time for it to be received and for it to clear. If paying online, don't wait until the last minute. The longer you pay your bills consistently on time, the higher your credit score will be.
Member Comments