Establishing Credit

Establishing Credit

Establishing Credit

Having no credit information or no history of having any type of credit is by far a lot worse than having a poor credit score. What this means is that lenders, banks etc have no means of determining if you are a good or poor risk to lend money to. Even a poor credit score gives the lenders some indication as to how good or bad you are at managing your financial affairs and whether or not you have the ability to pay back any monies borrowed.

Within your credit report is the information as how you obtain your weekly/monthly income and what outgoings you have against this income. No credit history means there is no record of any of this available to them so therefore they cannot determine what category you are in. Establishing your credit can be as simple as taking out your first credit card with a company who specialist in dealing with this type of case. However you will need to search long and hard for these companies and then you normally will end up with an unsecured credit card which will probably only have a limit of $2 300, with start up costs at times of $2 300 plus monthly and annual fees you can find yourself in trouble very quickly if you only pay the minimum payments each month.

A better option would be to find a secured credit card. Although these will not cover you if you are trying to pay unexpected bills because basically like borrowing your own money and there are normally monthly and yearly fees with them although not as high as unsecured cards. You can now get what they call preloaded credit cards were you pay into the card before you use it and can only spend what is already paid in.

A good option is to have a bank account were you have your income paid into it and some bills paid by monthly debit paid out. Providing you keep the account in credit in other words paying in more than you are taking out this will start you on the road to building a part of your credit history.

Another way is to find a car dealership who specialist in selling vehicles on credit to people with a poor credit history or no history at all. However with this strategy you will need to look around at what these dealers offer to ensure you are not going to get ripped off. Look at only vehicles you can compare with other dealers on price to ensure that the vehicle price is not loaded upfront before they obtain credit for you.

You will have to follow this course of action for a minimum of six months (the longer the better) with your bank account and loan before the credit bureaus have anything to start working with. DONOT forget during this time you must keep your bank account in credit and ensure that loan for the car the payments are made every month and on time.

Not everybody likes having any kind of debt but if at some time in the future you want to purchase a house then it is essential to prove that you can manage your financial affairs correctly. Poor credit report is again different to no credit history you may have had a period in the past like losing your job and falling behind with loans, bill payments but are now back to work and just starting to get your affairs in order you will have to now prove over a period of time that you are back in control.

It is therefore important to obtain your credit report and keep track of what it contains any negative entries that you find must be handled correctly and removed; due to the complexity of this you will do no better than get help from an expert. Go to http://credit-repairsoftware.com and watch the video.

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