How to Enter the Working World With Good Credit
When you finish your schooling and set out into the working world, you’ll find yourself at some point in need of credit.
You may want to buy a car, rent an apartment, or just get a cell phone in your own name. And of course, before long you may want to buy a home. Not only that, good credit will help you land a good job and get lower insurance rates.
The best idea is to start while you’re still in school, but if you haven’t done that, start now.
The first step is to order your free online credit report, even if you’ve never established credit in your own name. That’s because identity theft is rampant, and there could be accounts in your name that you don’t know about. So first check to see where you stand.
If there are problems, start right away to correct them.
If there are no problems, the first step is to open a checking and a savings account. Keep good records so that you never overdraw your checking account, and strive to put 10% of your income into the savings account each month.
Next, slowly establish at least 3 lines of credit. Choose from major credit cards, gas credit cards, or a retail store line of credit. Make sure that if you choose a retail account that the store does report to the credit bureaus.
Before you apply, look at their requirements to be sure you qualify. You don’t want to be rejected on your first application!
If necessary, get a relative with excellent credit to co-sign, or get a secured credit card.
A secured card requires you to deposit money in a savings account as security for the line of credit. But since these cards report to the credit bureaus, your wise use will help you establish a good credit history. After you’ve established yourself with the company, you can ask to be switched to an unsecured account.
Once the first source of credit is established, wait a few months and apply for a second one. Again, first read the requirements and make sure you qualify.
Be careful to use less than 30% of your available credit, and always, always pay your bill on time.
Next get a small installment loan from a bank or credit union and make every payment on time. If you need a car, choose a good used model. The interest rate will be a little higher, but since the price tag will be far less than that of new car, your payments will still be smaller.
Instead of pushing your budget and giving yourself sleepless nights worrying over bills, spend less and put a portion into savings each month. A cushion of savings will give you freedom, and the ability to take advantages of opportunities later on.
So make your future bright: Establish good credit, restrain your spending habits, pay every bill on time, and save a little each month. Not only will you have fewer worries, but when you do need credit it will be easier to get and will cost you less.
