Many people who haven’t been living completely on their own for a while don’t realize just how hard it is to get and maintain a good credit score. Usually, they also don’t usually realize exactly how important having good credit is. When buying a car, renting an apartment, or even applying for a job, the companies you are doing business with will usually check your credit score to determine the risk involved in doing business with you. Most of these tasks are nearly impossible without at least some type of fair credit rating on file.
It is extremely difficult for people to establish credit with so many creditors not willing to offer credit to people who haven’t already proven that they are credit worthy. So, how are people who have never had any need for credit supposed to establish credit? The simplest way to accomplish this goal is to find someone who trusts you completely and would be willing to cosign with you on some sort of loan. This loan can be for a car, a computer, or anything which you need. By having a cosigner, you are giving the company a reliable back-up plan and they are giving you the opportunity to establish a good credit history.
Many people are not fortunate enough to have a cosigner available to take out a loan with. In this case, things become significantly more difficult for them. Without an established credit history, you will not be able to purchase a car without a very large (usually above 75%) down payment on the vehicle. The best option in this scenario is to simply have patience and save as much money as possible. The more money you have in your bank accounts, the more likely you are to be approved for credit. Also, make sure to keep all of your accounts in good standing. Your own bank can be your best friend when it comes to requesting a line of credit or a loan as long as they know that you can handle your money in a responsible way.
Credit cards are extremely dangerous for people who don’t have a lot of experience handling money. Credit cards give people a feeling of wealthiness and also makes them worry-free about their spending habits. It is so much easier for a person to spend money that they can’t see themselves spending and that they didn’t work for. But, credit cards can be your best source of funds in an emergency. The problem is, many credit card companies will not offer you a line of credit without having some sort of credit history. If you are looking for a credit card which is relatively easy to get, look at Discover. Discover tends to extend credit to people more easily than others.
Another important thing to remember when it comes to developing and maintaining credit is to make sure that you pay your bills on time, and early if possible. By not paying your bills on time, you are sending a message to every person you do business with. That message is saying “I have no experience handling money and I am very irresponsible with the money/credit I do have”. Late payments on your credit file are red flags for any creditor, even employers. Employers look at your credit to determine whether or not they can trust you to show up to work, do your job correctly, and make wise decisions.
If it just simply isn’t possible for you to pay your bills on time, talk to the companies that you wont be able to pay. It is so much simpler to explain your financial situation to people that to mess up your credit for the next seven years, if not longer. Most creditors and business are willing to work problems out with you to make it possible to keep your products and services which you purchased from them. If they are not willing to work with you, they lose business and they know it. So, do not be afraid to call and explain what is going on in your life. Although it may not be any of their business, a little embarrassment is much less damaging than a bad credit report.
Credit is all about responsibility. Be responsible with your money and don’t spend more than you need to.