Establishing credit requires a considerable amount of time, patience, and perseverance. There are no surefire shortcuts or tricks that can lead you to a high credit score within a short period. Your credit score reflects your credit worthiness based on your payment history, credit experience and other financial aspects as well. As important as building credit may be, it is even more crucial that you take time in doing it the right way.
Having a low credit rating usually means difficulty in obtaining credit cards. However, credit card providers can give you a chance to establish your credit through certain credit card types such as those indicated below.
Department store credit cards
Department stores have probably asked you if you would like to sign up for a store credit card but you have politely declined. Some believe that store cards are unnecessary but this is a completely flawed idea. In actuality, there are two reasons why store cards are great if you want to start establishing credit.
One, obtaining store cards is easier as compared to bank-issued credit cards. Two, department store credit cards are very useful as you can use it on a daily basis for purchasing your everyday needs. So if you have difficulties getting a credit card from banks consider going to a department store and apply for a credit card. Just make sure that you find out if they report to credit bureaus because if they do not, then such card will do no good to your credit.
After you get the card, make sure that you constantly remind yourself to use it properly and responsibly. Never use it to overspend, but only think of it as a tool toward establishing credit. Just ensure that you only make reasonable purchases with it and regularly pay your bills in full and on time so you can build a good credit history.
One caveat here. Store cards may have their own fee structure and interest rate related costs. Read the fine print carefully to understand what these parameters are.
Secured credit cards
If you have tried store credit cards and failed, you can still have a shot at establishing credit with the aid of secured credit cards. Secured credit cards are much easier to apply for, however, you have to make a certain security deposit before you could avail of the credit card.
Typically, the credit limit on secured credit cards is equal to the amount of money deposited or the monetary equivalent of the property used as collateral. You can choose to increase your credit limit later on by adding more deposits but if your initial purpose is to establish credit, then doing so is not advisable.
If you fail to make payments on your secured credit card, the issuer takes the money deposited as payment for your debt. As in the case of properties secured, issuers will make necessary arrangements to satisfy the debt incurred.
Getting your first credit card can be very challenging and depressing especially if you get rejected frequently. However, with the proper knowledge, you can successfully obtain one and start establishing credit. With responsible payment practices, you can build a good credit and get any type of credit card you want later on.
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