Building Credit history to improve credit score is something you just can’t ignore it in this society. Suppose you’re just graduated from school and about to obtain your very first bank card. You do your best to complete all the forms, filling in every line on the application, only to realize a few days later that you have been rejected. Well, it is not uncommon for the first-time credit card applicant to receive disapproval letter. So, what are the simple ways to building credit score?
Before you start to build credit score, check if you have established any credit score or not by requesting a free credit report copy. You might be surprised to find out that you actually have built very short credit history, because of a gym membership, utility bills or an education loan.
The free report can be obtained from the 3 major credit reporting agencies; Equifax, Experian and TransUnion. By law, you have the right to receive these reports upon request once a year for free from each agency. You can do this through AnnualCreditReport.com.
Despite the fact it appears that getting no credit is actually a positive thing because it can indicate you have been financially strong enough to use cash for every purchase you’ve ever made. However, the only prove that loan providers can see if you are really responsible on your personal finance is to see your credit score and your credit history.
Obtain a bank credit card by using the bank you are banking with
Most of the time you can get approved easily for applying for the bank secured credit card at where you open your checking or saving account. Because you have fund in the bank as a collateral, it reduces the risk of lending the money to you, even if you have never had credit score before.
Due to the lack of credit history, your borrowing credit limit is probably low. Don’t worry too much about that. After you have established an excellent history with your bank, you’ll be able to apply for a regular, unsecured bank credit card or even other bank’s credit cards.
Get yourself a store bank card
Store credit cards have low credit limits but more lenient approval needs. It seems like every store nowadays offers a credit card. These types of cards frequently provide a free account-opening bonus like 15% off your first purchase, so take full advantage of these offers.
One thing you need to be cautious is that you want to be sure you have the ability to pay for the item you buy. Keep in mind that you’re trying to build credit history! If you can’t afford an item that you want, please don’t buy it. You need to be able to pay for everything you buy on time, all the time, in order to establish credit score.
The bottom line about building credit history is that we all want to have decent credit scores. If we don’t have a decent score, we must improve credit score to increase our chance to get the best interest rates and give us great saving down the road.