Do's and don'ts of establishing credit
Everyone needs credit. It's a necessary
part of daily life.
Whether you're renting an apartment, buying a car, renting a car, getting a cell phone or preparing to buy at an online auction, having credit in your name is part of the approval process.
So how does one go about establishing credit, particularly in these days when credit is so tight? Here's what Steve Bucci, the president of Money Management International Financial Education Foundation and the author of "Credit Repair Kit for Dummies," suggests.
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Do's and don'ts |
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Open a bank account. This will not appear on your credit report, but bank account numbers are often requested on credit applications.
Apply
for a credit card. To avoid being denied credit, apply only for those cards whose requirements you are likely to meet. Department store or gas credit cards are usually easier to obtain than a bank-issued card with a Visa or MasterCard logo.
Before
applying, make sure the creditor reports account
activity to the credit bureaus. As the
purpose of obtaining the card is to establish
credit, you want to choose a card that will
help you do that. If you want to get a Visa
or MasterCard, ask at the bank or credit union
where you have your account.
Charge
purchases and make payments on time. Use your credit card for purchases, and make sure to pay the balance on time. Once you have used the card responsibly for three months, you may want to apply for a Visa, MasterCard, American Express or Discover. These cards will allow you more flexibility in charging purchases, but will also give you more opportunity to get in trouble.
| -- Updated: June 16, 2008 |
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