by
Carl Hampton
12/21/2009
Congratulations, you
have graduated high school, you have a car,
a goal and a lifetime of opportunities now
is the time for that pesky responsibility to
kick in. You have been accepted into your
first choice school, you are officially a
college student, but what’s the next step?
You see, right now is the perfect time to
start something that will follow you for the
rest of your life—your credit. Most incoming
college freshmen have no credit, or are just
beginning to get their feet wet, so to
speak, with perhaps a low-balance credit
card, or a car or cell phone payment in
their name. But this is the time where
credit can become quite useful, so how do
you build credit for the first time?
One easy answer to this
question is to open a bank account, you may
have to have a parent or friend with good
credit co-sign for you, but that is a good
thing about building new credit, you don’t
have to go it alone. Bank accounts don’t
show on your credit report, but lenders
request it to see that you have made good
money decisions in the past if you have
little to no credit history. Your bank
account not only shows withdrawals, it shows
a (hopefully) steady flow of income. But
keep in mind that negative news will be
reported on your credit score, so keep those
checks from bouncing.
I mentioned income before, another good idea
to establish yourself in the world of credit
is to get a good job and keep it. On your
credit report there is a section entitled
“identifying information”, this section
keeps track of your employment history. This
information is pertinent because is gives
prospective lenders an idea as to who you
are and whether or not you can hold a steady
job. It shows stability to get and keep a
good job; it shows that you are capable of
bringing home the bacon necessary to pay off
the loan you are trying to be approved of.
This information also shows your income, a
person making minimum wage is not going to
be able to keep up with the payments that a
CEO of a huge company would.
Many people also think
that applying and paying back a small loan
is a good way to establish credit. Banks and
lenders make funds available, that you may
or may not qualify for, to go towards buying
a used car, paying for an appliance, or even
a vacation. This type of credit is known as
installment credit, because you pay back
what you owe in installments with interest.
Probably the most important bit of advice in
the establishing of credit is; Don’t Screw
Up. Negative reports take a long time to
make amends for, and collection agencies
engage stresses you don’t need in your life.
And on top of that, if you trash your credit
it could mean taking years longer to get the
car or home of your dreams.
"Your" Money Matters, by
Carl Hampton
From the Author of "From
Credit Despair To Credit Millionaire."
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