Tips to Start Building Credit
Table of Contents
Intro to Start Building Credit
The importance of having credit profile with a good credit score and credit worthiness is huge. Lot of perks comes with a good credit profile. I’ve listed below some of the benefits if you are creditworthy and have a good credit score.
- You can get a better interest rate on Credit cards
- Better interest rates on Personal Loans
- You can get up to 0% APR on Auto loans
- Better interest rates on Mortgage Loans
- Auto insurance can be offered at lower rates
I would like to share a personal story which emphasize the importance of having a credit profile. One of my friend who came to United States a couple of years ago was planning to purchase a car using an auto loan. When he applies, it got rejected for the reason that he doesn’t have any credit profile. He was sharing that he never have any loans or credit cards earlier so his credit profile was never built. So it’s important to have a credit card to start building your credit profile and score.
Open a credit card
You can checking with the financial institution with whom you have a checking or saving accounts. Those institutions are the best ones to approve you a credit card without any previous history. Some banks like Bank of America approves you a credit card when you apply for checking accounts. Its worth checking when you open a checking or savings account with a bank.
Apply for a secured credit card if you don’t have credit history
Lot of financial institutions have a secured credit card products. Secured credit card is like a prepaid card where you pay a deposit upfront. Then you can use the card as a credit card and pay it back. Once you close the secured credit card, your deposit will be sent back to you. Some banks offers a regular credit card automatically if you use their secured cards for a specific time frame. This is a good way to start building your credit.
Final Thoughts
You have to be aware that it takes time to build creditworthiness and have a good credit score. So it will take 6 months minimum to have some credit activity in your profile. One of the best way to check your credit profiles through services like Credit Karma. Most of the credit cards have a snapshot of showing your FICO Score and credit activities. You can also get a free annual report from Experian or TransUnion to check your credit reports.
Hope this article was informative and helpful, let me know your thoughts and comments. Please check out my other articles that helps you learn more about various credit cards.
