Make Sure This Is Not A Debit Card, But A True Line Of Credit

Category: Finance, Credit.

Many young adults who are just starting out usually have no credit history. However, sometimes you may need to get a loan.

Maybe they just paid cash for everything and have never needed a loan before. "Cash and Carry" , as I call it, is a good responsible way to buy things. Like for your first car or home. Even though a low credit score for lack of credit history is not always bad, it can affect a lenders decision to give you money or not, and it can affect how much the loan is going to cost you in terms of an interest rate. If you have no credit history, your credit score is probably very low. It can also affect how much you can borrow. If you have a checking account, ask the bank if they offer overdraft protection.

So I m going to give you a proven strategy to establish good credit quickly. This is like a mini loan to cover any amounts you spend over your balance so you don t bounce checks. Make sure this is not a debit card, but a true line of credit. Also ask them if they offer a major credit card like visa or mastercard. If you re not approved, ask if they offer a secured visa card. Look for the ones that offers the lowest application fee, and they report to all three credit bureaus. You can also look online by typing" secured visa card" into google.

Another way to acquire a good credit history is to take at least$ 1000 and open a 6 month CD( certificate of deposit) account. Ideally you can do$ 500Anyway, to continue this strategy, a loan for$ 1000, using that CD as collateral. If you can do more, go for it. The reason is simple. Now I know you re thinking, "Just take that$ 1000 and pay off the loan using the same$ 100" But don t stop there. You are far more likely to get approved for a" secured" loan than an unsecured loan when you re just starting out. Take the$ 1000 loan, and open another 6 month CD account at different bank.

Do this one more time at a third bank. Get another loan for the$ 1000 at the second bank. In the end, you have three$ 1000 loans, and three$ 1000 CDs. Pay the minimum payment ON TIME for each of the 6 months. Each loan will have a minimum payment amount. In the last month, cash out all your CDs and pay the loans off. You now have a credit history, and it only cost you a few dollars in interest rate fees to do it.

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