How To Establish Credit

How To Establish Credit

When you hear about financing you usually hear about credit as well.  How well is your credit, do you have good or bad credit?  What is your credit score?  What you don’t hear much about is how to establish credit and today I wanted to show you a common and easy way to establish credit if you have none.

My favorite suggestion to most folks is a safe and easy one.  I like the idea of establishing your credit with a secured credit card.  A secured credit card is exactly what it sounds like a credit card that is secured… let me explain.  A bank or lender will approve you for a secured credit card, lets say with a credit limit of $300.  However that credit limit is secured, the way they do that is the bank ask you to give them the $300 as security.

You might be thinking, well am I just not borrowing my own money back?  The answer is yes, however the difference is the bank or lender is reporting your behavior to the credit bureaus, this is called credit.  So in essence what you are doing is showing the bank how you are responsible with money while they do not have any risk of losing since they have the $300 as security.

Now remember this isn’t a long term credit card to have, this is mainly just to establish you credit.  Once you establish it you can explore other credit cards or lines of credit you may be interested in like a car or home.  The main idea of credit is to have the lender report your behavior with money to the credit agency, which is how credit works.  

If your interested in this idea, save up the $300, find a bank that will issue one and apply.  Use the card, pay back the borrowed money on time over and over again.  Over time your credit will not only be established but your behavior to a potential creditor in the future will be established as being good & this should be your goal!

With a heart of a teacher I look to educate my clients about the process of buying, selling or renting real estate.  I strongly feel an informed and educated consumer will make better decisions and be less likely to be taken advantage of.

Have questions about this or other topics, don not hesitate to contact me.

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Luis Cuevas, Realtor®

RE/MAX Cross Country

1990 Justin Road

Highland Village, Texas 75077

(214) 783-0535

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