Study How to Build Credit - The Easier and Faster Way additional

How to Build Credit - The Easier and Faster Way

How To Build Good Credit

The question as to how to build credit is paramount for people who have no credit. Just as a side note, building credit is not the same as rebuilding or restoring credit. What's the difference?

Well, building credit means that you have never obtained any form of reportable credit or loan. Your credit file is either shows no activity or is non-existent. It can also mean that your credit is slow and needs to be built up. In other words, you're starting from scratch or near scratch.

Rebuilding, restoring or repairing credit means that you previously had established some form or other of credit, but now you have negative items on your report, along with the commensurate low score. In other words, your history is tainted or damaged.

This article addresses the first two situations (starting from scratch or near scratch).

Everyone needs to start building credit at some point - that is unless they have chosen a hermit or other atypical lifestyle. And the good thing is, starting out isn't that difficult.

Getting approved for that first credit card can seem like an overwhelming task. When you apply for first time, they check to see if you have credit (a catch 22 of sorts).

But today some lenders make it easier for your first time. If you have applied for a few credit cards and were turned down, don't worry. A little change of strategy will almost certainly put plastic in your wallet in no time.

One common mistake that people tend to make when applying for credit cards is applying for the incorrect card, that doesn't fit their situation. The major cards like Visa, Master Card, American Express and Discover can prove difficult to come by for the first time card applicant.

But finance cards are much easier to get. Finance cards are issued via a store or franchise, and can only be used at that business or its affiliates. Some finance cards, for example, include Target, Best Buy and Sears cards.

Other easier to get credit cards are those issued by gas companies.

Though finance cards do not carry as much importance on your credit report as a major credit card, they are a good way to start out. It shows responsibility for a new card holder.

College students are luckier in that sometimes get credit card offers at school, often from more reputable companies with better rates and conditions. The companies even offer incentives such as free lunch for applicants. Why do they do this?

Because a college student is likely to get a well-paying job once they graduate. The company is investing in you today to get your business tomorrow.

If you still find it difficult to get a finance credit card you may want to consider a secured credit card.

Secured cards are issued based upon a deposit you make as the credit limit. It may sound strange to some to pay $500 to get a limit for a $500 credit card, but a secured card can be a major positive impact on your credit report.

When applying for a secured credit card, keep two things in mind: that the card will still report your credit limit and, depending on the creditor, the card might not show up as a secured on your credit report.

It is essential the issuing company reports your credit limit. This is because of the way credit scores are calculated. To score well, your debt to limit ratio should be less than 30% on revolving accounts.

Also note that if your secured card doesn't report the credit limit, the credit reporting bureaus will use the total amount charged as the credit limit and this will look as though your debt to limit ratio is 100% (not good).

Additionally, it is extremely important to make sure your card is not reported as a secured. Ask before signing on the dotted line. If your credit card company reports your card as being a secured card, this will impact negatively on your overall score.

Another way to go is by taking up offers of pre-approved cards that come via junk mail. The downside with these is that the limits offered are usually low ($300 on average) and there are upfront and annual fees involved. The upfront fees can eat up your most of the allowed limit therefore you end with an almost fully secured credit card.

If you choose to go the pre-approved way to build your credit, be aware that some of those companies have been known for some questionable business practices and even trickery. Read the fine print carefully or ask a knowledgeable friend for help.

Download a FREE insider report that shows you easy and quick credit building steps and strategies. David Kamau had rebuild his own credits and offers credit building tips [http://aboutcreditandrepair.com/newsletter.htm] on his site.