Educational Consumer Tips
Credit- How to Establish It
Credit allows you to buy goods and services now and to pay for them later, but it seems that in order to get credit you have to have credit. If you don't have credit there are ways to obtain some, and they are as follows:
1. Open a checking account, savings account, or both
2. Apply for a local department store credit card
3. Deposit money in a bank and borrow against the money
4. Get someone to co-sign a loan with you. You can also use your previous bill-paying history (such as paying utility or medical bills on time), as well as paying rent or house payments on time.
Lenders are in the business of making money and that is why they are concerned with your previous credit history. When applying for credit, there are four basic aspects a lender looks at when considering your application. They look at your:
Ability to repay the debt, usually by inquiring about your current job or income;
They look for signs of stability (ie: how long you have been at your job);
and they look at your assets (ie: car, home, etc.).
Under the Equal Credit Opportunity Act, a lender may not deny you credit because of age, race, color, national origin, sex, marital status, religion, or receipt of public assistance. If you previously had trouble paying the bills or filed for bankruptcy, it may be difficult to reestablish credit. Bad credit stays on your credit report for 7 years while bankruptcy stays on your record for 10 years. The best thing you can do is be patient. Nothing will clean up your credit report except time.