Everyone naturally starts out with no credit history and no credit score, yet when lenders determine if they will give you a line of credit, they look at your history. When you have don’t have established credit, you get very poor offers from lenders. They’re happy to give you high interest and high fee credit. But, there’s no way around it, when you’re starting out, you take the offer – it’s what you do with the opportunity that matters.
Start with ONE Credit Card
Do not apply for several credit cards hoping you’ll get approved for one. Every time you apply for credit, your credit report receives a hard inquiry that temporarily hurts your score. If you have no history of credit and apply for an unsecured credit card, there’s a good chance you’ll be denied. Instead, go to your bank and request a “secured” credit card.
What is a Secured Credit Card?
A secured credit card is a safe and easy way to establish credit. For example, if you request a $500 secured card, you will give the bank a $500 cash security deposit. If you don’t pay the credit card balance, the bank is covered with the security deposit. The benefit for you is that the card is treated like a secured credit card, and your payment history will be reported. The result is you’ll have begun your journey of establishing credit.
What to Focus on When Establishing Credit
- Payment History – Payment history determines 35% of your credit scores. It’s critical that you always pay on time. One lay payment can lower your credit scores by 60 to 100 points.
- Credit Utilization – The balance on revolving accounts determines about 30% of your credit scores. Keep your balances on all of your cards below 30%, if you can keep your balances at $0, that’s even better.
- Age of Credit Files – 15% of your credit score is determined by the age of your accounts. The longer you have an account in good standing, the better.
- Credit Mix – Credit mix contributes to about 10% of your credit scores. As you grow your credit adding auto loans and eventually mortgage loans can help.
- Hard Credit Inquiries – 10% of the score is determined by hard inquiries. Every time you apply for credit, a hard inquiry takes place on your report.
Want Help Establishing Credit or Credit Repair?
When you’re getting started or in need of credit repair, working with a credit repair company can expedite the process and give you peace of mind. There are certain strategies you can take advantage of to get where you want to be faster, and stay there once you arrive. Give us a call today, and we’d be happy to answer any of your credit-related questions.
It’s never too late to get great credit.
1 (877) 772-7312