In American society credit history is of extreme importance. Your credit history is linked to your social security number. Your credit history is a condensed data sheet of your loans, your repayment, whether you pay on time etc.
To get a loan you must have a good credit history. To acquire a good credit history you must have a repayment history of a loan. This is a typical problem that is difficult to come out of.
You may start establishing a credit history by opening a savings account and a checking account. Maintain this account without any check bouncing. Bank account transactions show how you manage your money. However, a bank account does not insure you of getting a loan. The lenders would look wherever your utility bills or other apartment bills in your name are paid in time.
Your employment history can also be taken into account by creditors. If you have a steady job with a good pay this can also be considered as an advantage to get a loan. If you have stayed in a residence continuously for a good period of time, this also is considered to be a positive point by creditors.
If you have managed to get a vehicle loan and have repaid without defaulting you build a good history fast. Often, people take loans to maintain a good credit record. You may also opt for a co-signer with good credit history to sign your application for credit card. However, if you default on the payment, the co-signer will be in trouble.
Store cards are another option before you are accepted by creditors. Gas stations, departmental stores and local stores are all a good bet. Maintain a good record on these cards by paying them off completely every month. Some of these cards are not reported to credit bureau. It is advisable to check if the card you are opting is reported to credit bureaus. It is a wasted effort if you are trying to build a credit with unreported cards.
After establishing your record with these stores your chances of being accepted by creditors improve tremendously.
After establishing credit history by using these store cards etc, you may apply for the actual credit cards. You may first approach your bank where you have already established a record with your banking transactions.
Often you are approached by credit card companies asking to apply. This does not ensure their approval. Do not try to apply for too many cards at one time. Rejections by creditors also matter to building credit.
Getting credit cards or loans to build history is only the first step. The actual part begins once you start using these facilities. To have a good history you must follow certain simple rules.
* Once you get credit cards you should:
* Keep Credit card details secure
* Make payments on time
* Close the account if you have discontinued a card
* Pay more than the minimum due
* Keep a track of your payments and credit rating
* Always spend less than you can afford