How To Establish Your Credit When First Starting Out

Maintaining a solid credit rating is vital to the future of your personal financial success.  One challenge with credit though, is that it can seem impossible to get offered credit unless you already have established good credit.

Starting from scratch with no credit history can make gaining traction in the financial world seem like an impossible task.  By responsibly using the tools available to you, it’s possible to establish solid credit in the early years of your adult life.

Here are some strategies to get yourself started on the right foot to establish a good credit rating from the get-go.

1.    Check your credit report

You first need to determine where you are currently in order to know where you’re going.  With no credit history, your credit file is very light.  Also, with the rise in identity theft and credit dangers lurking around every corner it’s important to check your credit first to make sure you aren’t starting in a hole.

∙    It’s important to check your credit file often.  Federal law allows you to obtain a free copy of your credit report once per year.

∙    To continuously monitor your credit, stagger your requests for the reports.  This way, you will be alerted immediately if something illegal has been tacked onto your credit report.  Instead of getting all three reports at once, request one per bureau every four months.

2.    Pay your bills on time

Your history of on time payments is one of the most important factors that influences your credit score.  When you pay your bills on time each and every month, it shows creditors that you’re living well within your means.

3.    Put a recurring bill in your name

If you pay a cell phone or cable bill each and every month, be sure to pay it in full and you’ll establish yourself as a person who’s financially responsible in the eyes of potential creditors.

4.    Have someone put in a good word for you

You may be able to use someone else’s good credit to help establish your own reputation with creditors.  Having someone cosign your loan for you or by becoming an authorized user on the other person’s credit card or store account.

5.    Get a student credit card

College students can often get credit cards more easily than others can.  In fact, on most college campuses you can find booths at student events that promote credit card sign-ups with drawings, prizes, and other incentives.

6.    Use credit cards sparingly, but regularly

If your goal in obtaining a credit card is mainly to increase your credit score, make small monthly purchases and be sure to pay the balance in full each and every month.

∙    Never forget that a credit card is not cash.  Money borrowing from a credit card company means agreeing to pay more than the purchase price if you fail to pay the entire balance back on time. In order to raise your score, be smart and make small purchases that you can cover in full when the credit card bill comes due at the end of the month.

7.    Stick to a monthly budget

Having a lifestyle where wise financial decisions are a habit is key to keeping up a good credit score.  Listing all of your income and expenses will help you to determine which financial resources you have available to you at any given time.  When you have this information, you’re less likely to get yourself into debt.

A fulfilling life is often built upon a foundation of financial stability.  Misusing credit however, can create a lifetime of debt servitude.  Choose a life of fulfillment by applying these strategies to establish a solid credit rating at the beginning of your financial life.

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