Applying For Credit: How to Prepare

June 21, 2012 by  Filed under: Credit 

If you’re new to the world of finance, there should be at least one thing that is becoming increasingly clear. You have to have credit to get credit. “But, I have no credit,” you say. Correct. Welcome to the chimerical cycle of applying for, obtaining, and using credit. While you always have to feed this credit beast, it at least becomes tamer, easier, and does you some favors later on down the road.

So, you’re probably looking for ways to prepare yourself before you begin applying for credit. Keeping this smart attitude can ensure your success as you embark on your journey into the world of credit. This article will walk you through the steps you need to know so that you can start building credit in no time.

Credit Need to Know

Since the day you held a job and were over the age of 18, you’ve probably been getting credit card offers every month. Most of these cards have quite limited lines of credit ($500 per month is pretty standard), and really high interest rates (somewhere around 13%). Don’t even think about using these things for cash advances; rates hover around 25% on these cards!

  1. Get that credit card. Yes, the awful, no rewards, high interest, low credit card. Truth be told, it’s about your only option. Go ahead and get it. There are better things in store for you later on in life, but for now, this is it.
  2. Use that card. Use it a little, use it a lot, it doesn’t matter. What’s important is that you pay off the balance on time and every time! This is extremely important. If you don’t do this, then you’re better off never getting the card in the first place. With online bill pay features it may be tempting for some to pay off the card after every other transaction. Don’t do this. Let the balance sit until the end of the month, and then pay it. What you’re doing here is establishing a credit score. If you never carry a balance, you won’t be able to establish a score. That’s why waiting until the end of the month to pay it off is important.
  3. Consider getting a small loan. It can be for anything: a car, a trip, money for your startup business. Paying off this loan demonstrates trustworthiness and reliability, and can help you establish your credit score. But, make sure you don’t go into credit debt here!

When you want to start applying for credit for bigger, more serious things (i.e. a mortgage), having established a credit score with these smaller, more forgiving outlets will be a huge favor you’ve done for yourself! But, please… try to avoid credit debt at all costs!

The Lee Law Firm aims to provide local residents with high quality legal representation at affordable rates. Their attorneys specialize in all aspects of credit negotiations. As debt lawyers, the Lee Law Firm attorneys understand the pressures their clients face as they battle a financial hardship.

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