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[H896]How To Build My Credit

by Dror Klar, Dro

Starting out from scratch with no credit after high school can be a confusing time, since you have likely never been exposed to such things as credit cards, checking accounts, loans, and 401(k)s, but building your own credit does not have to be that difficult at all as long as you have a sense of responsibility when it comes to your money. You may be tempted to rush out and get a credit card immediately after you turn 18, but you cannot do this in most cases and get one without having a checking and a savings account first. You also have to have a job to be initially approved for the card, but not to keep carrying it, much in the same way that an apartment complex cannot evict you for not having a job, but they can evict you for not paying the rent.

Before getting a credit card, ask yourself what you want to use it for. If the answer is anything other than building credit, then you probably do not need a credit card. You should understand that these cards are not made to benefit you, they are made to benefit the credit card companies that issue them and that it is very easy to let your debt to them get out of hand. There are a few rules to follow when you do decide to get a credit card and start building your own credit.

The first rule is to never buy anything that you would not be able to save the cash for. If you have the money in the bank to make a large purchase with and you want to use your credit card to reap the reward points for it, that's fine, but do not spend more on the card than you can pay off at the end of the month, for that way be dragons. I recently purchased $800 worth of furniture on my credit card, but as soon as it showed up on my account activity online, I paid it out of my checking account. The point is to not make large purchases you do not have the cash to cover. If you want that new big screen TV, make a payment to your savings account until you have enough for it, use the card to make the initial purchase, then use the money you saved to pay what was charged on the card.

The second rule that you should follow concerning credit cards is to not close any of your credit card accounts immediately before you apply for a loan. This will lower your credit score, since a large part of your credit score is based on your credit history and if your longest standing account is closed, your score will drop because that history is no longer factored in.

Thirdly, and probably most importantly, is that even if you do not have enough money to pay off your card every month, you should never, ever, ever make the minimum monthly payment. Always pay over the minimum or it will take you literally decades to pay off the balance, depending on how much money you have on the card. It is easy to get behind and start paying only the minimum every month, but do not let yourself do it. For your credit, it will be a fatal mistake.

Building credit is building a better future. Nowadays it takes good credit scores to purchase a home, buy a car, and get a credit card and so on. If your credit is bad usually more bad follows. It takes you to find a solution to repair your credit. The fist step in repairing your credit is to take a look at each bill, including your past due bills. Make sure the current bills are paid in full if possible to avoid any more reporting on your credit report. Once you have taken care of your current bills work toward paying off your late bills.

Some current bills such as utilities or other unsecured bills can wait longer than others, so you might want to payoff your secured bills first. Secured bills means that you have more to loose so you want to take care of those first before paying off nonessential bills and risking losing your home, car or whatever you are paying on. Most utility companies will wait on a bill if you don't have the funds. You may be able to get some help paying utilities.

The Social Services and some Religious Organizations offer support to low-income families. If you have a loan with a bank you might want to contact your lender to see if there are options for reducing your monthly mortgage or car payments. Some banks are waiting for financial burdens to occur and offer a solution, such as refinancing your home or car.

You want to be careful since some of the loans have high interest rates attached. Some loans may even have hidden charges attached so it makes sense to read the fine prints thoroughly so that you are not taking advantage of. Remember you are attempting to repair your credit so finding the best deals is important. This brings us to cut backs.

When we are striving to repair our credits we want to cut back on spending as much as possible. Sometimes we have to do without in order to better our future. Credit repair is the process of building your credit history and reestablishing your life. This process means that you have to look at all angles to find a solution to repair your credit.

When you are searching those angles you need to consider all aspects of what the solutions include. If there are added charges you probably are getting in deeper rather than building a better future and repairing your credit. Debt Counselors, Deb Consolidation, Bankruptcy and other companies that offer credit repair solutions are often the last resort to repairing credit.

Even if you think bankruptcy is the answer you must realize you will need a few hundred dollars upfront to start the process. Lawyers are not cheap! On top of the high prices you will have to pay you will also go through court proceedings as well as many other headaches. Therefore if you can find a way out of debt on your own this is the best solution. If you are in over your head and have nothing to loose it might be wise to ignore your debts. This sounds ludicrous but if you can't get out this sometimes is the only answer to debt relief.

If you are on the spot and not so deep in debt you might ask your family or friends for a loan, only enough to pay off your debts. You might have to pay interest, but friends and family will often charge less and give you a longer time frame to repay your debt. The solution is often better than applying for a loan to payoff your debts from a bank.

Most lenders at bank are welcoming people that are struggling and take full advantage by finding you a loan with high interest rates. Your monthly installments are often lower, but your price in the end is steep. It makes sense to search all options before deciding which solution for repairing your credit is right for you. Always keep in mind when you are repairing credit that you are working toward a better future.

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Both Dror Klar & Christos Varsamis are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Dror Klar has sinced written about articles on various topics from Satellite, The Internet and Finances. Dror Klar is a writer in the field of finances and is currently assisting those in need of , particularly in the state of. Dror Klar's top article generates over 3350000 views. to your Favourites.

Christos Varsamis has sinced written about articles on various topics from Time Management Skills, Education and Customer Service. Christos Varsamis is a Marketing Consultant. Sign for your Free 15 day Success E-course at . Get your Free E-courses “How to Cre. Christos Varsamis's top article generates over 5400 views. to your Favourites.