Creating Credit with Credit Cards
Many people everyday search for solutions to reestablish or
establish credit. Some people have never earned credit and find
it as difficult to get credit as though with bad credit. If you
have no credit then you must be advised that the creditors are a
toss you hand up in the air case in most instances. You may ask
why I am getting rejections if I do not have credit.
Furthermore, the answers are never easy, since we are living in
a ruthless world with more personalities than the common
multiple. Everyone has their own way of handling things,
including credit card lenders.
If you do not have credit and want to apply for a credit card,
then one of the smarter things to do is contact your creditors,
requesting letters as reference. Any creditor may include
utility providers, insurance providers, and so on. For the most
part, if you have paid your bills faithfully longer than one
year then the creditors are likely to give you a letter of
recommendation.
If this is your first time applying for a major credit card,
then you may want to start with your local bank. If you have an
active banking account for more than a year, and have maintained
your account without overdrafts occurring, then the bank can
offer you personal loans or credit cards to put you on your way
to getting your credit established. If you apply at your bank
and are approved, be advised that the first year the interest
may be higher than average. Once you have the card, make stable
payments up to six months then the bank may reduce your credit
interest, or else offer you a card with lower rates. You can
also contact your card provider, requesting that your interest
rates are lowered.
The first credit card offered may not bring forth great limits.
In other words, the bank may extend you a credit limit up to
$500 depending on your source of income. Once you have the card
for six months and pay on time, the bank may increase your
limits to around $1000 or more. The low limit card is optional,
since it will help you to remain stable and build your credit at
the same time. It is important to purchase only necessities to
avoid overdrafts, high APR charges and so forth. Prepare
yourself for a new experience, by learning to manage your funds
and credit card.
If you work to build you credit, later the hounds will be on
your doorstep offering you higher credit limits with lower
interest rates. Take note that most offers are gimmicks to lower
you into a scheme. Therefore, do not take on more than you can
handle and only use one line of credit at the start of building
your credit. Once you have build credit, your next step is
keeping track of your credit rates, and spending. Each person in
the US is eligible for an annual monthly credit report and the
reports are free.
Next, you want to take care that you monitor the activities on
your credit reports, card statements, and bank statements. The
monitoring process is to help you avoid identity theft, which
could ruin you for life. Any fraudulent activity found on your
credit report or statements should be immediately reported to
the proper authorities and your cards and accounts should be
closed immediately. The monitoring process will also help
prevent loss of payment receipts and help you to monitor how
your card provider is handling your credit. Credit card lenders
should report to at least three major credit bureaus monthly,
the status of your payments. This will increase your credit. In
addition, if you know where your credit stands it will give you
leverage when you apply for other credit cards or loans.
Finally, if you are accepted for a credit card and have built
your credit, keep up payments on your debts, including rent,
utilities, insurance, and so forth. Also, use your card to pay
your bills, including groceries, insurance and so forth. Make
sure you save money to pay the cards debt once it arrives.