Average Credit Scores

Getting Credit Is Just The First Step

If you’ve tried a bank, department store, or even credit card companies directly and failed, not all is lost.

Secured credit is a last resort, but it is much easier to obtain than unsecured credit. When a credit card or loan is secured, it means that there is an asset linked to the account that the lender can take if you fail to pay your bill. A example of a secured loan would be a mortgage or a auto loan. If you fail to make payments, the lender will take your house or car in order to supplement the debt.

You can establish the same thing at most banks with a secured credit card. You can pledge money you pour in an account to secure the credit card. For example, you would obtain a secured credit card with a $500 limit if you put a $500 deposit in the bank that is linked to the card. If you fail to make payments on your credit card. Then the bank takes the deposit.

Again, you want to check and be sure that this secured credit is reported to the credit bureaus. If it is then it can be a useful tool to establish that first piece of credit history. After you maintain the account in good standing for a while, you may be able to obtain a regular credit card or loan.

Establishing Credit is Only the First Step

Establishing a good credit history takes time!. There are no shortcuts when it comes to establishing a good credit history. Your credit score is based on a number of factors such as payment history, length of time you’ve had credit, and much much more. Therefore, while it is vital to initially establish credit, it is even more important to take the necessary time to do the right things to maintain good credit.

Start With Your Bank

There are a couple of things you can do that can be helpful in your journey for establishing credit. The very first thing you should do is open and maintain a checking and possibly even a savings account at your local bank. This is helpful in two ways:

• When you have a active banking account in good standing. You are proving that you can manage money. While bank accounts aren’t always a part of your credit score. Lenders can use this information to determine whether you are a credit risk to them or not.
  
  
• Establishing a relationship with a bank will increase your chances in getting approved for a loan or credit card. If you already do business with a bank, then they should be the first place to look. They know you and they value your business. This existing relationship could carry some weight when seeking credit.

How To Establish Credit

When you don’t have a credit history, it can be hard and stressful when trying to obtain a credit card or other types of loans. If you don’t have any credit, not many places are willing to accept you, yet how can you ever establish credit. If nobody is willing to give you any?

Understanding What Lenders Are Looking For

Since you have no credit and is looking to establish some for the first time. Lenders can’t look to your FICO score to determine whether to lend you money or not. In these situations the lender has to examine other factors that can help them determine if you are a credit risk or not.

• Bank accounts. You don’t need to have a credit score in order to open a checking account at your local bank. Opening a checking account will not require any credit. It also doesn’t get reported to the credit bureaus to establish any credit. Even so, your account history can be a vital component when lenders consider giving you a credit card or loan for the first time.
  
  
• Employment history. Another, factor important to lenders is your employment history. They want to know if you are able to hold a job or if there are periods of unemployment. Your ability to keep a steady job can improve the likelihood of getting approved for credit.
  
  
• Residence history. Lenders will also look to see how often you move and whether you rent or own. As with employment history, it pays to have a stable residence. Owning a home, even if just jointly with a spouse, carries some significance as well.
  
  
• Utilities in your name. Even without a credit history, it is possible to sign up for many utilities. Having an electric, gas, telephone, cable, or water service in your name can help. Just having your name on these accounts won’t establish a credit score, but it can be helpful for new borrowers.