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Whether you are a young adult or just arriving in the country,
establishing your credit will be an important aspect of your
introduction to the financial world. Many important decisions ranging
from finding a job all the way to a mortgage will rely on your credit.
Follow these steps to help you establish credit in a smart and secure
way.
Step 1
Open a checking and savings account.
By themselves, they do not give you credit, however, they will show
that you have money and how you manage it. If you are a student, check
if your bank offers a free student account, if not check what you can
do to get access to a free account. Make sure your bank account always
has a positive balance and that you do not overdraft it.
Step 2
Apply for your bank's credit card or a department store card. Because
you do not have an established credit history, the initial interests
will be very high. This is why you need to make sure that you use your
credit card, but pay it back before the end of the month so you do not
have to pay for interest. Only get a credit card
if you are sure you can do this, otherwise do not get one. If you feel
too tempted to buy things you cannot afford because of a credit card,
chances are you will get into debt.
Step 3
Get a co-signer for a car loan or a credit card. Remember that if you
do not pay your bill on time, your co-signer is responsible for paying
it. So make sure that you will be extremely responsible with that.
Step 4
Remember to not apply for more than one credit card. If you are
refused, wait a year and try again. The more credit cards you apply
for, the lower your credit rating gets because the lenders will think you are desperate for credit.
Step 5
If all else fails, get a secured credit card.
This means that there is an asset linked to the account that your
lender can take if payments are not made. Make sure that this credit is
reported to the bureaus.
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