With a limited credit history you probably won’t qualify for a major credit card yet. Therefore you may want to consider opening a charge account with a large oil company (e.g. Exxon, Chevron, Mobil, Texaco) or a local department store (as long as the store reports to the three major reporting agencies). In general, oil companies and department stores do not impose the rigorous standards of performance as do the major credit card companies. So obtaining one of these cards will be much easier in the beginning.
Another step you can take in establishing credit is to put one or more of the household utilities in your name and pay the bill on time each and every month. Your responsible payment history will be collected by the three major credit reporting agencies(Equifax, Experian, and TransUnion) which will help you establish a good credit rating.
Points to Remember When Applying for and Using a Credit Card:
- Credit cards are not a source of free money – misuse can damage your credit.
- Make sure you understand the “Terms and Conditions” of the card including due dates, interest rates, fees and grace
periods before applying. - Keep monthly charges manageable – don’t go overboard on your spending
- Don’t over do it by getting numerous credit cards
- Pay the amount in full each month.
- And always pay your bills on timeBy following the simple guidelines above, you will eventually prove your credibility. And in doing so, will qualify you for an extended line of credit.Undoubtably, establishing credit is a process whereby you have to prove to creditors that you are a resposible consumer, have all of your financial affairs in order and you can pay your bills on time. These all are the Strategies for Young People to establish good credit. Read this article if you are interested in establishing credit from scratch.
