Credit Smart Book

 How to Establish Credit

No Credit? No Problem. Here Are Some Steps You Can Take to Establish Good Credit

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At first, it may seem difficult and frustrating when trying to obtain a credit card or other type of loan because you've never had credit. Or you can't rebuild your credit because you've had credit problems in the past. Fortunately, there are steps you can take to start establishing a strong credit history.

Why you should establish credit

If you've always paid cash or used checks to make purchases, and haven't used credit, it's a good idea to start. And if you've had credit problems in the past, it's important to re-establish your credit history because more and more businesses are making the case that you must have good credit before they extend products or services to you.
  • You may need good credit for such routine matters as having the utilities connected to your home.
  • Good credit is important to secure financing when buying furniture, a computer, a car, or even a new home.
  • Employers often check the credit rating of prospective employees. A solid credit rating reflects positively on your ability to manage your job responsibly.
  • Renting an apartment may be easier. A good credit rating tells landlords that you are a person who's more likely to pay the rent on time each month.
  • If you need a loan, banks may look more favorably upon you if you have a good credit history.

Start With Your Bank

There are a few things you can do that can help in your quest for establishing credit. The first thing you should do is open and maintain a checking and possibly even a savings account at a local bank. This is helpful in two ways:
  1. When you have active bank accounts in good standing, you are proving that you can manage money. While bank accounts arení»t typically a part of your credit score, lenders can use this information to determine whether or not you are a credit risk.
  2. Establishing a relationship with a bank will improve your chances in obtaining a loan or credit card through them. If you already do business with a bank, they should be the first place to look. They know you and they value your business. This existing relationship should carry some weight when seeking credit.

What a credit card can do for you

Besides being a good way to establish a credit history, credit cards are very convenient. They allow you to:
  • Buy items online, over the phone, and from mail-order catalogs
  • Make travel reservations, purchase airline tickets, and rent cars
  • Shop more safely by not carrying a lot of cash
  • Budget larger purchases by paying in installments
  • Access funds in emergency situations
  • The Secured Prepaid Visa Diamond RushCard allows you to spend up to the credit limit you establish by funding an account which is held as security for your credit card account. Make sure to enroll into the RushPath to Credit so that your card use is reported to credit agencies for building your credit history.

Other ways to start a credit history

  • Establish a pattern of regular payments by putting your apartment and utilities in your own name and paying your bills on time.
  • Apply for department store and gas station credit cards. Don't get a new store credit card every time you get a discount offer, but one way to start a credit history is to have one or two department store or gas station cards.

Use your credit wisely

Once you start using credit, ití»s essential to manage it properly. By using all of your credit responsibly, including your Wells Fargo credit cards, you can go a long way in building strong and healthy credit. So use your card to make purchases, but doní»t go over your credit limit. Pay at least the minimum payment due each month, or more if you can, and pay on time. For more tips on smart credit use, read Managing Your Credit.

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