Have you just graduated from college or have you worked in your first job for the last 3 months? Now, you want to get a credit card but no credit card companies want to give you a credit card because of lack of credit history.
Fortunately, you have some alternatives that you can do to get your first credit card and start building your credit history. You have 2 options from where you can get your first credit card:
1. From Big Department and Grocery Stores
When you buy at big department or grocery store, ask the customer service if the store offers a personal credit card. If yes, apply for one credit card first and wait for the approval of your credit card application. If your application is approved, apply for a second credit card from another big department or grocery store 3 months after the first credit card. In this case, the credit card company may not turn down your credit application unlike if you applied two or more credit cards within one or 2 months.
2. From the Banks or Credit Unions
If you cannot get your first credit card from the big department and grocery stores, the next step is to go to a commercial bank or credit union that offers credit cards.
The bank or credit union will offer a Secured Credit Card after you opened a bank account and deposited a certain amount, let’s say $500. The credit limit on your credit card will be up to $300. You cannot withdraw the amount of $300 from your bank account because it will serve as your collateral for the credit limit of $300. After using your credit card for 6 months or so, you can talk to the bank or credit union customer service if you can be granted a regular and unsecured credit card. If your credit card application is approved, you can withdraw and use the $300 collateral.
How to Establish Credit History
Once you got your first credit card, you are now on your way to start building your good credit history. Some of the things that you may do are as follows:
If you plan to rent an apartment, make sure that your name is on the apartment rental contract and the one responsible for paying the monthly rentals.
See to it that all the utilities and other household payments (electricity, water, heating gas, telephone, cable TV, etc.) are also under your name.
Pay all your apartment rentals, utilities, household bills and others promptly by cash or personal checks, but never by credit card because you will be paying interest and other charges.
Use your credit card in buying groceries, clothing, furniture, gasoline instead of cash or personal checks. See to it that the money intended for buying groceries, clothing and gasoline is deposited in your checking or savings account. When you receive the credit card statement, then pay the total amoun t for your purchases promptly. For the furniture purchase, you can pay it by installment.
Use and manage your credit card wisely to establish a strong and healthy credit. Otherwise, you will find yourself in a financial situation that you could hardly pay the monthly credit card minimum payment and that will ruin your credit.
9 Reasons Why A Person Needs A Good Credit History
To easily get loan approval when buying a computer, car, clothing, household furniture or a home
To easily rent an apartment because the landlord will know that you are capable to handle the monthly apartment rentals
To provide your prospective employers with information that you are a responsible person
To get another credit card with a lower interest rate. See to it that you apply for up to 3 credit cards so that your credit score will not be negatively affected. If other credit card companies offer you with lower interest rate, transfer the credit card balance with higher interest rate to the credit card with lower interest rate and call the credit card company to close the account. Tell the credit card company with the higher interest rate that the reason for closing the account is “ACCOUNT CLOSED BY CUSTOMER ” so that your credit score will not be affected.
To purchase merchandise online, over the telephone and from mail-order catalogs
To make travel reservations, purchase airline tickets, rent cars and hotel accommodations
To shop more safely by not carrying a lot of cash
To budget larger purchases by paying in installments
To have access on credit card funds in emergency situations
Quote for the Day :
One man gives freely, yet gains even more; another withholds unduly, but comes to poverty. A generous mane will prosper” Proverbs 11:24-25
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