How to establish credit?

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To have a credit score, you need at least one account opened where the creditor reports your activity to at least one of the 3 credit bureaus. Calculating a score when you are just starting out may take longer than you expect. To begin establishing credit take a look at a few suggestions:

  1. Apply for a credit card at a department store. Many department stores may be more lenient with their guidelines. Check the department stores for their terms to establish credit.
  2. Become an authorized user. If you have a family member that is willing to add you as an authorized user on one of their credit cards, this can help you begin building credit too.
  3. Open a secured credit card. A secured credit card is backed by a cash deposit that you make when you open the account. The deposit required is usually to equal the credit limit. So, if the credit limit offered is $250, you will need to deposit $250 to the lending institution. Often, good payment history with a secured credit card will lead to being offered a traditional credit card without the deposit requirement.
  4. Don’t apply for multiple lines of credit in a short amount of time. It may have a negative impact on your credit score. The typical recommendation is that you wait about 6 months between applications.

If you are preparing to purchase a home, remember; there are mortgage programs available for people that don’t have a credit score, but most lenders want to see at least 12 months of credit history with 2 or more trade lines (credit cards, auto loan, personal loan etc.) Building a strong credit score is not accomplished overnight!  We recommend consulting with a credit counselor for more information.

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