How do I build credit? February 26
Let’s say that you just moved to the United States and you want to buy a new car. You see one of the zero down and no payments add in the newspaper and you head over to the dealer. You look through and find your dream car and take it out on a test drive. Everything goes well and your ready to sign the paperwork.
The first thing the dealer asks for is your social security number and your personal information. And as everything is going well, the dealer runs a credit check and declines you.
The reason why you got declined is that you have no credit history since you just moved to the country (or other reasons). Dealers and banks first look through your credit history to judge how good you have been with paying back previous loans. There are several ways to build your credit. The first and the best way is to apply for credit with a local credit granting business that reports to the Credit Bureaus. Make sure you pay your bills on time and do not overspend. Slowly in a couple of months your credit will start building.
If your unable to find a local credit granting business then you can sign up for a secured card. A secured card will be just like a credit card but you will be required to put down a security (usually cash). There are many banks that provide a $500.00 secured card after you send them $500.00 in cash. Then they keep track of your payments for a year and return your initial deposit if all your payment were on time.
Lastly you could have a family member or a friend with a good Credit Score to co-sign with you. But keep in mind that any late payments would hit both your credit histories and thereby bring both your Credit Scores down.
In either of the above cases if you keep making your payments on time you’ll be having a good credit in no time.