Build Your Credit Score From the Beginning – Episode #95
Building Your Credit Score
When you have no credit history it can take as long as 18 months and as little as 6 months to get a good credit score. Here are the steps to follow to establish a strong credit score:
- Open a bank account. Make sure the bank you choose is a full service bank and offers secured credit cards, credit cards and personal loans in addition to checking and savings accounts. More on this in Step #3.
- You need a Social Security Number. It’s a critical piece of the credit report machinery. Once you get this you can start the credit building process.
- Open a secured credit card with the same bank you got your checking accounts. Use the secured card, but try to only use 20-30% of the limit and pay all payments on time! Do this for 4 to 6 months.
- Next, apply for an unsecured credit card from that same bank. Why? Your bank may place less weight on your credit score and judge you more on your history with them and thus, may be more likely to approve the application.
- [Optional] Get a personal loan from that same bank. Go for a small amount like $500. Why? A personal loan is an installment loan and this is a critical piece of the credit score factors pie. Just make sure you make payments on time. Yes, this could lead to what might be an unnecessary loan, but it will help your credit.
I realize that you may want to go out and just apply for a bunch of store cards or just apply for the first credit card offer you see. That might work in building your credit score, but it might take longer. You might able to skip #3 if you are in college, but I like the secured credit card step as it teaches credit card responsibility. The last step is optional, but expats usually want to apply for credit quickly and this helps establish a thicker credit file.
- Build Your Credit Score From the Beginning – Episode #95
- Expats and Credit Scores – Episode #69
- How Do I Build Credit As A Recent High School Grad? – Episode #38
- What is a Secured Credit Card? How Can it Help My Credit Score? – Episode #21
- When Should You Get Your First Credit Card? – Episode #22
- Personal Loans and Credit Scores – Episode #70