3 Things You Need To Know About Establishing Credit
Having a credit card is essential in today’s world. Besides being a useful financial tool, they’re necessary to establish a healthy credit score. But if you have no credit history, or limited credit history, it can be difficult to know where to begin when you’re looking for a credit card.
Here are three things you should know about applying for a credit card when you have no or limited credit history:
- There are many different credit cards for people with many different needs. Whether you want a basic card to pay for small, everyday expenses, a card you can use to pay for big expenses over time, or a credit card to carry only in case of emergencies, there’s a card designed for you. Maybe you want a card that offers great travel benefits, or valuable rewards. Perhaps you’d like to transfer a balance, or get a lower interest rate. For every need, there is a credit card. The key is finding one for you. If you have bad credit, no credit or limited credit, you’ll want to look for a card that will approve you based on that.
- Secured credit cards are a great way to build credit. A secured credit card requires that you put down a deposit to act as collateral in case you default on the loan. When you have limited credit history, it makes sense that potential lenders will want to protect themselves from loss, in case you don’t pay your balance back. If you use the card and pay it off according to the agreement, the bank will report that to credit bureaus, and your score will gradually improve. Many people start out with a secured card and transition to a regular, unsecured one over time.
- It takes time and patience to achieve a great credit score. You cannot build your credit history overnight. It takes a while for credit bureaus to reflect positive behavior, such as making payments on time, keeping your balance low, and keeping the terms of your credit card agreement. If you keep at it though, over time you’ll find your credit score steadily improving.
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