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Many times people who have never had a credit card or any other form of credit think that the banks will turn them down for lack of credit history. While this may be true in some cases, no credit does not mean you have "bad credit", and provided you have a steady income, chances are you will be able to obtain a credit card.
In fact, there are many banks that routinely offer Visa or MasterCard credit cards to first time applicants. Everyone must establish a credit history somewhere! If you have employment or other means of steady income, select a bank and apply for their credit card. Don't run out and apply at ten different banks attempting to increase your chances, because that will actually have the opposite effect. Each time you apply for credit, whether it is for a credit card or a loan of some sort, the lender makes an inquiry on your credit report. Rejections show up on your credit report, and multiple rejections send off a red flag to potential creditors that you are desperate for cash- and therefore might have difficulty repaying the credit.
If your first attempt to getting your first credit card doesn't land you a card, there are two other things you could do to start building your credit to remedy the situation. First, head to your favorite department store and try getting a store specific credit card. These department store cards are easier to get than a Visa or MasterCard, and you will most likely be approved for one of these cards even if you've never had credit before. Once you have a department store card, buy something and then pay it off when the statement arrives. You might want to do this for a few months, making purchases and paying them off when the statement arrives. This will start establishing a credit history, and it will show that you make your payments on time. Once you've done this for a few months, you can try to apply for the Visa or MasterCard again. The banks will then have your income and a credit history to use as a basis for determining whether or not to extend you credit.
Another option to establish your credit when you don't have any, is to get yourself a secured credit card. Secured credit cards are limited to the amount of money that you deposit with the credit card company, so essentially, they are a debit card that is not connected to a checking account. While they have their disadvantages, a secured credit card is a viable option for someone who is having difficulty establishing a credit history and obtaining their first credit card.
In the process of establishing your credit history with your department store card or secured credit card, it is absolutely critical that you do not have late payments or miss a payment. However, you may opt to carry a small balance from one month to the next on your department store card as it will show potential lenders that you are able to handle an outstanding balance. For example, if you've made a purchase or purchases that total $100 in your first month, when you get your statement, pay $70 and allow $25 to carry over to the next month. When the next statement comes, pay the $25 and half of whatever purchases you've made since your last statement.
As long as you consistently pay your bills on time, and do not carry a large balance from month to month, you are establishing a strong credit history. A few months of these good credit habits and you should have no problem when you apply for a Visa or MasterCard. |
| Author: Debbie Dragon |
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Author Bio:
This article has been provided courtesy of Kitchen Junkie. Kitchen Junkie offers great kitchen articles available for reprint and other tools to help you get the best bargain on kitchen gadgets. |
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