How to Establish or Re-Establish Your Credit

By
Real Estate Broker/Owner with Texas Five Star Realty, Plano Texas

 

How to Establish or Re-Establish Your Credit

 

In today’s tough economic times, where every person is being evaluated by a number (Credit Score), having a good Credit is an essential to enjoy an appropriate standard of living. You need to have a good credit just to rent an apartment, rent a car, open a bank account, get insurance, get a job, buy a car or obtain a home mortgage. Depending on your Credit you will be denied, will be offered a good rate, or will be offered with higher than normal rate/down payment, etc. Like most cases in finance, those with the lowest risks get to pay the lowest rates.

 

This articles provides steps and guidelines for those

 

Who do not have a credit history such as new high school graduates, new immigrants with permanent residency, etc.  (Need to establish credit)

 

Who do have a credit, but their credit and credit score are not good (Need to re-establish credit) Steps in establishing and improving credit

 

Steps in Obtaining Credit

 

1.       You will need to have checking and savings account when applying for credit cards. So, if you don’t have, open a checking and savings account. Banks offer many different checking accounts types, each has some positive and negative features and a monthly fee associated with that type of checking. Make sure to select a bank or a feature that does not cost you every month.

 

2.       Make sure a Telephone number is listed under your name.

 

3.       Apply for several “secured credit cards”. Secured Credit Cards are those credit cards (e.g., MasterCard, Visa) that you need to put some money in the bank ($1000, $2000, etc) and the bank issues a credit card up to you available deposit.

 

4.       Apply for department store charge cards, gas charge cards, furniture stores credit cards, and other easy consumer credit cards. When you are purchasing their products, usually they give you easy credit a couple of hundred dollars above your major purchase (e.g., $2000, etc).

 

5.       Open a CD (Certificate of Deposit) account with a bank with a minimum of $1000. Wait for a few months and then go apply for a loan using your CD as collateral. Usually the finance charge for this types of loan is slightly higher than the interest they give you on your CD. Make sure you pay your loan payments on time for minimum 6 months that allows the payment history shows up in your credit reports.

 

6.       Apply for an unsecured credit card or loan (e.g., if buying a car) as a co-borrower using a family, relative who has good credit as a co-signer.

 

7.       Apply for unsecured credit card, after you have established some credits, with you as a primary borrower.

 

Managing Your Credit and/or Re-Establishing Your Credit

 

After you established a credit, it is very important you keep that credit is good or very good condition, e.g., pay all your bills, loans, etc. on or before time and manage your credit cards and loans. To see the tips on how to manage your credit and have a good credit score please see my other article in
http://www.texasfivestarrealty.com/What_Makes_Up_a_Credit_Score_and_How_To_Improve_it.asp

 

Do’s and Don’ts When Applying for a Loan

 

If you are buying a home sometimes soon and have plan to apply for a mortgage loan follow these Do’s and Don’ts recommendations:

http://www.texasfivestarrealty.com/Dos_and_Donts_Before_Applying_a_Mortgage_Loan.asp

 

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Rainmaker
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Kathy Stoltman
Rockwood Realty - Ventura, CA
Ventura County Real Estate Consultant 805-746-1793

Bahman, I think this advice will be helpful to a whole lot of folks who were affected by the downturn of the economy.

May 02, 2013 06:54 AM #1
Rainmaker
323,116
Bahman Davani, CM at Texas Five Star Realty, Plano, TX (214) 457-7055
Texas Five Star Realty, Plano Texas - Frisco, TX
Homes for Sale in Plano, Frisco, Prosper, Allen TX

Kathy, yes I agree. Many were affected by this economy and are trying to re-build or re-establish a good creadit. Thanks.

 

May 02, 2013 07:08 AM #2
Rainmaker
2,387,235
John Pusa
Berkshire Hathaway Home Services Crest - Glendale, CA
Your All Time Realtor With Exceptional Service

Bahman - Thank you for the very good information about how to establish or re-establish your credit.

May 02, 2013 07:40 AM #3
Rainmaker
323,116
Bahman Davani, CM at Texas Five Star Realty, Plano, TX (214) 457-7055
Texas Five Star Realty, Plano Texas - Frisco, TX
Homes for Sale in Plano, Frisco, Prosper, Allen TX

John, Thank you for your comment.

May 02, 2013 10:13 AM #4
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Rainmaker
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Bahman Davani, CM at Texas Five Star Realty, Plano, TX (214) 457-7055

Homes for Sale in Plano, Frisco, Prosper, Allen TX
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