Financial Zip

Credit is an important tool in the world that we live in. It allows us to buy things that we don’t have the money for. But it really is a catch 22 we want credit when we can’t obtain it. Once we have it we wish sometimes that we didn’t have it.

Why is it Important to build Credit?

Everyone needs in some way shape or form to obtain credit at some point in your life. Eventually you need to borrow money to buy a car or to buy a home or something in the future that you cannot pay for upfront in one lump some. Enter credit. The reason we want to have and to build good credit is that the better the credit score the better the interest rate the less you have to pay in interest on whatever it is you buy.

A common question with people that want to establish credit is I don’t have a credit history and no one will give me any credit without it. Here are some simple ways to establish some credit.

· Secured Credit Cards – Secured cards are great ways to establish credit.. You can usually get these through your bank. You will put a predetermined amount of money into an account that you use with the secured card. The advantage of this is that it builds credit over time.

· Use a Co-signer – Lenders will consider the co-signer’s existing credit. The co-signer essentially ‘vouches’ for you while you build credit. Note that this is a big responsibility – you can cause major headaches for the co-signer if you don’t pay as agreed.

· Retail Programs –You can obtain a retail card through a store or gas station or some other business that offers a credit card. Most retail stores offer these, they are fairly easy to obtain but can easily be abused. They also carry high interest rates so watch out. If you use these be sure to pay them off monthly.

· Get a Credit Card through a reputable institution – Apply for a card that a company is willing to give you. Generally most credit card companies have cards that will be available specifically for people with no credit history.

The main point here in obtaining a credit card and building credit is that we want to demonstrate to lenders in the future that we are responsible for our credit. By so doing you will be able to save yourself a lot of money over your lifetime.