Since the 1970s, American consumers have become increasingly dependent upon credit. We use it to finance our homes, cars, splurges and even our basic needs. While this dependence is not recommended there are some good and necessary uses for credit. If you need credit, try following these steps to get it.
- Clear up bad credit and debt. If you are new to credit skip to the next step. For everyone else step one is paramount. If you want credit to buy a house or get a loan to start a business you will need to establish a good credit history. The only way to do that is to clean up what you have. Pay your creditors, all of them. Write letters to any creditors you were late or behind with payments. Once you have paid the debts submit comments to the credit bureaus to explain the debt and payment.
- Know where you are. You can get a copy of your credit report free from any of the three main credit reporting agencies – Experion, Equifax and TransUnion. The federal government mandates that you can obtain a free credit report from one of these agencies once per year. For a free report, head to www.annualcreditreport.com. Review your report to know where you are. Correct any mistakes on the report through the report a dispute section of the website. If you have no credit or bad credit, then move to the next step.
- Start at your bank. If you are trying to get credit you should have a checking and savings account set up at a bank or credit institution. They know your money as well as you do and because you have an account your bank may be willing to issue an unsecured credit card.
- Apply for a secured credit card. For first time credit users and those on the path to better credit a secured card has several advantages. By providing the card company with a deposit against the credit you become a more secure risk for the card company and you have a chance to build your credit history. These cards require from $500 to $2500 for security deposit.
- Find a co-signer for your first loan. If you are looking for a loan for your first car or other large purchase then consider asking a relative for help. Make sure you ask someone with good credit and someone who will motivate you to keep your (and their) credit clean.
- Negotiate. When looking for a loan for a larger purchase if you have more cash upfront you may find lenders more willing to extend credit. For instance if you want to purchase a car and have half the money upfront, a car dealer will be more likely to extend credit for the rest even if you have less than stellar credit.
Though the access to credit is becoming more difficult it is still possible to get credit. Follow these steps and be willing to provide money upfront and you should be on your way. Your credit choices follow you for years so whenever you apply for credit, be sure you need it and can pay it back quickly or you risk credit hassles and higher interest rates throughout the years to come.