|It seems funny, but now is the
very best time to establish credit, when you are still a
student. If you wait too long, graduate and get a job, it is
much harder to qualify for a credit card or a loan. This is
because the banks look at a student's potential while they look
at the reality of that entry level job held by the recently
graduated worker. Students have the advantage of
several banks offering premium level credit cards on the basis
of their student status. These offers can be found by clicking
Establishing credit can feel like a Catch 22
process. Lenders look at your credit history, contained in your
credit report, in order to judge your credit worthiness. But you
need to have had credit in order to have a credit history. A
good credit history not only makes obtaining credit to purchase
big ticket items easier, but it may have an impact on the job
you get or the apartment that you are able to rent.
Don't be discouraged if you are just starting
out. The fact is that banks want to loan money and to issue
credit cards. A trustworthy borrower is a valuable asset to a
lender. In a nutshell the process of establishing credit is the
process of proving to potential lenders that you are going to be
a trustworthy borrower.
Banks look at several things before they
issue credit to an individual beside their credit report. They
check for income stability, employment history, amount of money
in savings and any land or valuable assets that the potential
borrower owns. The better these things look to the lender, the
more likely they are to offer credit.
Here are the steps to take to establish
Open a checking
Lenders expect to be repaid. Most commonly you will do that by
writing a check or using your bank's online bill paying service.
By having a checking account you are telling any potential
lenders that you are ready to pay your bills.
Prepare a budget.
A budget is nothing more than a plan. Where does my money come
from and where does it go? It's your money and a budget puts you
in control of it. Then put your budget into motion, fine tune it
and make it as part of your life.
Open a savings
Part of any good budget is a plan to save money. Savings
accounts help to cushion emergencies, provide the resources for
irregular purchases and, most importantly, set the means for
your financial goals. Having a savings account tells the
potential lender that you have a sound financial plan.
Look at your Credit
Check your credit reports for accuracy. Report any errors
immediately. You can purchase a
3-in-1 Credit Report from Equifax
for less than $30. This is
before applying for credit and periodically ( at least once
every three to five years ) to insure that you get the credit
that you deserve.
Assess your credit
Look at your credit reports. Look at your budget. Do you have
the means to repay a loan? Does having a credit card at this
stage of your life make sense? Be cautious and realistic. Only
apply for credit if you are sure that credit is right for you at
One thing lenders look for is stability. If you have a new job
or have recently moved, wait six months to apply for credit. If
you are due for promotion or a raise, wait till these things
happen before applying for credit.
Consider a secured
Secured cards are a great first
step for those with little or no credit history. They have all
the functionality and usefulness of their unsecured cousins and
using them responsibly lets potential lenders know that you are
properly prepared for credit. A credit card in
your own name can help you build a good credit history, a
valuable asset when applying for car loans, apartments, jobs or
mortgage later. Plus, there is no safer and more convenient way
to make purchases if you shop online or over the phone.
But along with the benefits of owning a credit card comes
responsibility, which, if mishandled, can cause serious
Obtaining credit is a necessary part of almost
everyone's financial plan. Establishing credit means putting
your finances in shape so that any potential lenders know that
you are ready and able to pay your bills. You should not try to
look like you are creditworthy. You should be creditworthy.
Students have the advantage of several banks offering premium
level credit cards on the basis of their student status. These
offers can be found by clicking