What is the easiest way to build credit?
David asked:
I’m 18. I have never had a credit card or gotten a loan. I want to get good credit because I am thinking of starting a business in the future and will need good credit to get a start-up loan but I don’t want a credit card because of the outrageous interest rates. Is there an easier way to build credit? Like with secured cards or something?
Ann
I’m 18. I have never had a credit card or gotten a loan. I want to get good credit because I am thinking of starting a business in the future and will need good credit to get a start-up loan but I don’t want a credit card because of the outrageous interest rates. Is there an easier way to build credit? Like with secured cards or something?
Ann
Tags: Build Credit, Outrageous Interest Rates, Start Up Loan
November 11th, 2010 at 10:29 pm
You won’t ever pay interest rates if what you want to do is get top scores in your credit.
This is why: Any time you carry a balance, you pay interest.
Any time you carry a balance you are doing severe damage to your credit rating.
Get a credit card – pay it in full each month.
By doing this you will never in your life pay interest (apr).
Don’t ever dare carry a balance – it could ruin your life.
Never use more than 25% of the available limit of your card at any time during the month.
Never close your oldest credit card for any reason, unless it has an annual fee.
Unfortunately, new laws are being passed that will make it pretty much impossible for anyone under 21 to get a credit card.
You will have to prove, steady employment, a checking account in good standing for 6 months, and proof that you will be able to pay back.
That said, I still want you to try.
Here are some ways:
- Get your parents to co-sign on a credit card for you.
- Get a secured card from your bank – if your bank does not offer one call around
- Try store cards and gas cards – easier to get than major cards
Remember – pay in full each month.
A lot of poor people believe that carrying balances is good – I’m not sure why – don’t do it.
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November 12th, 2010 at 8:13 am
Start out with a small line of credit. Pay your card(s) off completely each month. Gradually you will amass a very respectable FICO score. Same goes for auto loan or any other personal finance loan. Make all monthly payments on time. The idea is to establish yourself as “one who can be relied upon to pay his bills promptly” so when the time comes to start your business, you will be able to access the necessary capital to fund your venture.
Final note. As you acquire credit, make sure to pay off balances quickly. Nobody ever went poor pocketing the interest payments that would otherwise go to a lender.
November 12th, 2010 at 1:21 pm
Hi, good luck with starting your business. Before I answer the question I think it is worth considering how much capital you can raise/earn/avoid needing for your business without getting a loan or sharing equity. Business banking isn’t pretty.
Anyway to get a good credit rating, apply to get some credit cards, spend lots on them and pay off the balance in full at the end of each month. The higher the monthly values, the faster your credit rating will go up (so long as you are meeting the payments). Banks basically are interested in assessing how much money you have to spend and how well you manage your money.
If you’ve had an account with a bank for a long time and have lots of account activity, they will be more forthcoming in giving you their credit cards.
November 14th, 2010 at 5:19 pm
You only have to pay the interest rate if you actually use the card. If you get a card, but never use it, then it builds your credit, but you pay nothing. I have actually done this. For real. A store said that I could have a discount if I applied for a credit card, so I did, but I never used the card and never paid anything. Years later, I looked at my credit report and noticed that the card was being reported as an account that had never been late, in other words, positively. Weird
November 14th, 2010 at 8:47 pm
1. Open up a few credit cards. You don’t have to use them – in fact, you can cut them up and never use them. Just make sure they do not have an inactivity fee. This will increase your credit because each month you have the card open will show that you are responsible with money (able to have a credit card and not go in debt with it) and will also show that you had a credit card open and didn’t make any late payments. If you want to use a credit card, just pay off the balance each month and you won’t be charged interest.
2. When you buy a car (if you haven’t already), take out a car loan. You can make extra payments to get it paid off quickly. Having a loan with no late payments (and early payoff) will cause your credit to go up and look more favorable.
3) Don’t ever buy something with a credit card or loan that you cannot comfortably afford.
November 17th, 2010 at 7:34 am
You sound bright and like you will do well. Your best option is to get a secured card. I agree with you..stay away from those cards that charge outrageous fees. It is just not worth it.
This is alinkt hat will describe 3 ways to get credit when you have no credit or even bad credit.
Keep your balance under 30% at all times and that will give you the best positive impact to your credit score.
November 19th, 2010 at 10:45 pm
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November 21st, 2010 at 8:24 pm
you will not get the good credit if you not have a good payment history
pay the dues in time so that you will not need to pay the interest never use more than 25 % of the limit of your card in my view there are many benefits with the credit card because you can earn extra points which will be useful in the cash back during the shopping
i hope my answer will be of some use to you
good luck