Q&A: I am 20, How do I start my credit?
Question by Shawny™: I am 20, How do I start my credit?
I am a 20 year old college student, and have a part time job. I have never had a credit card or have gotten a loan. Every time I apply for a credit card, I keep getting denied due to lack of credit. I have a checking account and I am a very responsible with my money.
How do I start my credit? How do I get it from “no credit” to “good credit”?
Best answer:
Answer by Elley
I’m not sure what you financial situation is, but the best way to build credit if you have a checking account is through the bank your account is with. If you own property such as a car/motorcycle/boat/house/land you can use that for collateral. I would start small. Something easy to pay back like $ 500.00. It is not a large amount and really you shouldn’t even spend any of it. Just pay your payments. You can and should pay it off a little early if possible. Once it is paid off then you wait a couple months and go back. This time for $ 1,000.00, same deal. By the time you are finished with the second loan you should have no problem obtaining a credit card!
What do you think? Answer below!
Two ways, 1) get a department store credit card with a low limit, OR 2) you need to get a co-signer to sign a major credit card with you.
Getting a credit card is the easiest way to gain credit. Try looking for credit cards from small companies. Better yet, try to get a credit card through your bank. Banks usually approve you for one since they see you do have money in your account.
I have an 18 year old and 19 year old both with checking accounts. The bank we bank at gave each of them a credit card. So I would start at the bank you have a checking account with. I agree with building ones credit. But don’t abuse it either! If your out to just build your credit, when you do get your card use it only one time a month. As long as you show an active account and you pay it off monthly your credit builds. Again, go to your bank and talk to them. They should be able to help you.
You should read a book by Dave Ramsey called Financial Peace and the follow up book called The Total Money Makeover. This will get you thinking about “credit” and finances in a responsible way. You are VERY fortunate that you do not have any debt and you need to learn the skills to remain a financial winner throughout your life.
If you have $ 500 in a savings account, convert into a secured credit card. Most banks can set it up. Make sure they belong to the credit bureau.