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How To Establish Great Credit
By: Alex Fir
Building a good credit history is important. If you have no reported credit
history, it may take time to establish your first credit account. This problem
affects young people just beginning careers as well as older people who have
never used credit. It also affects divorced or widowed women who shared credit
accounts that were reported only in the husband's name.
If you do not know what is in your credit file, check with your local credit
bureaus. Most cities have two or three credit bureaus, which are listed under
"Credit" or "Credit Reporting Agencies" in the Yellow Pages. For a small fee,
they will tell you what information is in your file and may give you a copy of
your credit report.
If you have had credit before under a different name or in a different location
and it is not reported in your file, ask the credit bureau to include it. If you
shared accounts with a former spouse, ask the credit bureau to list these
accounts under your name as well. Although credit bureaus are not required to
add new accounts to your file, many will do so for a small fee. Finally, if you
presently share in the use of a credit account with your spouse, ask the
creditor to report it under both names.
Creditors are not required to report any account history information to credit
bureaus. If a creditor does report on an account, however, and if both spouses
are permitted to use the account or are contractually liable for its repayment,
under the Equal Credit Opportunity Act you can require the creditor to report
the information under both names. When contacting your creditor or credit
bureau, do so in writing and include relevant information, such as account
numbers, to help speed the process. As with all important business
communications, keep a copy of what you send.
If you do not have a credit history, you should begin to build one. If you have
a steady income and have lived in the same area for at least a year, try
applying for credit with a local business, such as a department store. Or you
might borrow a small amount from your credit union or the bank where you have
checking and savings accounts.
A local bank or department store may approve your credit application even if you
do not meet the standards of larger creditors. Before you apply for credit, ask
whether the creditor reports credit history information to credit bureaus
serving your area. Most creditors do, but some do not. If possible, you should
try to get credit that will be reported. This builds your credit history.
If you are rejected for credit, find out why. There may be reasons other than
lack of credit history. Your income may not meet the creditor's minimum
requirement or you may not have worked at your current job long enough. Time may
resolve such problems. You could wait for a salary increase and then reapply, or
simply apply to a different creditor. However, it's best to wait at least 6
months before making each new application. Credit bureaus record each inquiry
about you. Some creditors may deny your application, if they think you are
trying to open too many new accounts too quickly.
If you still cannot get credit, you may wish to ask a person with an established
credit history to act as your co-signer. Because a co-signer promises to pay if
you don't, this can substantially improve your chances of getting credit. Once
you have repaid the debt, try again to get credit on your own.
About the Author:
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