How do you get a loan or a credit card? By showing prospective lenders that you're responsible enough to pay your loans and credit cards on time.
Therein lies the catch-22 of credit. How are you supposed to get approved if you've never had a credit card or loan before?
Here are a few simple steps to begin building credit:
1. Sign up for a loan with a co-signer who already has good credit. A co-signer is simply someone who agrees to be responsible for the loan if you are unable to pay for any reason. Financial institutions are more likely to approve a loan for somebody with no credit history if there is a responsible co-signer.
2. Get your own starter credit card. Many financial institutions offer secured credit cards. These cards allow you to put money in your account on hold to be used as collateral. So if you want a card with a $500 limit, you would need $500 in your bank account to cover that. Keep in mind while secured cards sound similar to debit cards, they are different. Secured credit cards report to the credit bureaus; debit cards do not.
3. Only charge what you can afford to pay off. Building good credit means demonstrating the ability to pay back the money you owe. By charging small amounts and paying them back in full and on time, you're proving that you can manage credit responsibly.
4. Stay well under your credit limit. You’ll be scored favorably if you keep below 30% of your total credit limit.
For more tips on establishing credit, check out our Twitter page.
ABOUT UNITY ONE CREDIT UNION
Established in 1927, Unity One Credit Union is the oldest credit union in Texas. A member-driven and not-for-profit cooperative, Unity One CU served the employees and families of the BNSF Railway for 70 years. However, after transferring its corporate headquarters to Fort Worth in 1998, the credit union expanded its field of membership to include other non-railroad companies, organizations and individuals.
Today, anyone who lives, works, worships or attends school in Fort Worth, Blue Mound, Saginaw, Haslet, Keller, Colleyville, Bedford, North Richland Hills, Southlake, St. Paul, MN and Kansas City, KS may apply for membership. Unity One CU has seven branches to serve over 30,000 members nationwide. For more information about Unity One Credit Union, visit www.unityone.org. Think outside the bank.™ www.unityone.org