Not everyone has credit. The credit bureaus do not just automatically start you off with good credit and wait to see if you will keep it up or wreck it. You have to establish credit, and for some that is much easier said than done. It can be difficult to get credit when agencies are telling you that you need credit to get credit, but you can’t get credit until you have credit. It’s a confusing cycle, but it happens. Here are three ways you can establish credit from the ground up without too much trouble.
Apply for Secure Credit
Secure credit will help you establish credit and be able to apply for other types of credit in the near future. The trick is to pay your bill on time each month, not extend your limit and to pay in full. This requires placing a deposit with a financial institution and doing all the above mentioned things for a specific time frame, but it’s not that hard.
Don’t Abuse It
Use your new credit card, but don’t max it out. Just because you have a $1000 spending limit doesn’t mean you need to buy your first pair of Louboutins or take that spring break trip to Cancun because it feels like free money. Use it to buy gas and designate the cash you would have used for that to pay your bill at the end of the month.
Round Out Your References
It’s better for your score if you have several different credit references all paid on time and not outstanding. This might mean applying for a credit card, a student loan or a car loan. Of course, you want to have good credit, so don’t apply for any of the above if you cannot afford them.