Building Credit For First Timers

There’s always a first time. When you hear this adage, it’s usually to appease you when you’ve made a serious blunder. However, this time it’s a different scenario. It’s no blunder when you aim to build your credit, for the first time. In fact, you’re doing the right thing.

Why do you need to build a credit? In the future, when you’re going to take personal loans or car loans, you need to present a good credit history. Applying for credit cards for the first time wouldn’t be easy, either, unless you have a good score. But when you’re 18 years old and have barely made it out of home, presenting any credit is quite difficult. This is because you’ve never experienced any financial dealings under your name yet. You’ve never had your own bank account, credit card and so on.

But sadly, being 18 and moving out of your parents house are not acceptable reasons for you to get credit cards or loans. No matter how slow or painstaking, you need to build a credit first. But don’t worry. Building credit for the first time is experienced by everyone no matter how financially successful they are now.

When you have no credit card or bank account, you can’t be scored. But when you don’t have a credit score, you can’t get credit cards either. Ironic right? But here’s the solution to that. FICO, the scoring standard for credit, has what is called an Expansion score.

Expansion score is a method that uses non-traditional information of a consumer. These are rent and recurring bills payment history. Recurring bills include phone bills, cable, internet, insurance and so forth. There is also an alternative credit bureau which is called Payment Reporting Builds Credit or PRBC. You can visit their website, enter your information and pay a measly fee of $20. After which, every bill payment you receive, will be listed through this site. It’s like building your credit history in a rather easier and unconventional way.

Getting a secured credit card is also one great way of starting a credit. A secured credit card requires a security amount which you will use up with your every charge. This will not only get you started with credit but it’ll teach you to purchase what you can afford, too.

The most crucial advise in attaining a credit card would be, to not rush in to things. Just because you’re now on your own doesn’t mean you can freely use credit cards. First and foremost, you still have to learn how to handle your finances. You must learn how to live within your means first. So that when you’re ready to apply for a personal loan, you can do it without hurting your credit score.