Establishing Credit
When you are just starting out, you do not have a credit score. What this means is that you do not have any established credit. You do not have any loans, credit cards or mortgages to show how you make monthly payments. Established credit shows how well you make your payments each month in the form of credit cards, car loans, student loans and mortgages. I’ll show you the process on how to establish credit with my knowledge and expertise.
Where to Start
My recommendation while working in the financial industry and as a mom, friend and colleague, is to open a credit card. The most important detail here is the amount of credit you apply for. I highly recommend opening a credit card with a $500 -$1,000 credit limit. I want to stress to you to stay within that limit. Keep in mind this is to build credit, not to go on a shopping spree! Although this may sound easy now, but just wait until you really want something while you are shopping. Especially, when you know you could buy it because you have a credit.
Knowing and understanding how a credit card works is really important.
When choosing your first credit card here are a few things you will want to consider:
There are so many options to get a credit card, especially online. Be very careful and make sure you understand how the credit card works so that you are not surprised with a fee when you get your credit card statement.
I just want you to be so carful when using credit cards because I have seen many people get into a lot of debt. If you are struggling with debt and unable to make your monthly payment, learn how to repair your credit report.
My recommendation is to get an application for a credit card where you hold your checking account. You can always go online and fill out a credit card application too. When filling out an application online, please be aware of the risks associated with open Wi-Fi. You will want to make sure the website is secure because you will be putting in your social security number along with your date of birth and other sensitive information. I highly recommend filling out your online application at home with a locked Wi-Fi password. You will be required to provide the following information:
Essentially, credit card issuers do not know how well you manage your money when there is nothing on your credit report. When you apply for a loan or a credit card, the financial institution pulls your credit report to review the following details:
The loan officer is reviewing your credit report to assess what the risk level is to the financial institution. They are also assessing your ability to pay them each month.
However, if you do not make these payments listed above, the creditors will probably shut off your service or evict you from your apartment. Then they will report the amount you owe to the credit bureau and this will definitely hurt (or lower) your credit score.
The credit card company will notify you in writing if you are approved or denied. When going to your local bank, they may call you with an approval or denial. You can always ask for a phone call or email so you know quickly.
After being approved for your credit card, you will receive your credit card in the mail typically within 7-10 business days.
After you get your credit card, it is important to activate it. Follow the directions on how to activate your card either online or via a phone number. Then verify that your first and last name are spelled correctly on the card.
It is very important to make small purchases on your credit card to establish credit. If you want to establish credit, you will need to use your credit card to make purchases. If you do not use your credit card it will not establish credit for you.
I highly recommend small purchases so that when your credit card bill comes in the mail, you can pay it in full.
Here a few ideas to make one small purchase each month:
The idea is to make a small purchase. That way it is easy to pay your credit card bill in full each month. This is how you build credit.
When you get your credit card statement, you will want to review all the details, but pay special attention to the following information:
Establishing credit is really important. I recommend doing this as soon as you turn 18. It’s also very important to protect your credit and make sure you are making all your payments on time to get a good credit score. When you have a good credit score you get the best interest rates on loans and mortgages along with the best insurance rates for your home, cars, trucks, etc.
Learn More!
I hope you found this information helpful!
Any recommendations I make should be taken into consideration with your values and goals. You should make the best decision that aligns with your family’s values.
As a Financial Coach, my mission is to help families save more, spend less so they can buy and do the things most important to them and spend their time and energy focusing on their kids.
Spending quality time with your kids is more important than stressing about finances. Instead of going to friends and family and sharing your financial struggles, reach out to me. I love talking about money, values, assessments and strategies to make positive changes to your financial habits to live a life you love.
I understand because I’ve been through some really challenging financial situations. Learn more about me.
I’m a kind, heart-centered coach who is excited to help you! If you’re struggling with your finances, get the results you want – I promise to keep you accountable and help you manage your finances successfully . I have a 100% guaranteed or your money back for the 1st session!
Finally, I wish you success in your financial journey😊
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