Building Your Credit Correctly Without Going Broke

When trying to make the most of your credit, it is important to have a low cost credit card. This will aid you in building your credit without going broke. Many credit card companies charge fees for the privilege of owning a credit card. Those fees can be eliminated at the discretion of the credit card company. You can start to remove those fees by asking the card issuer for no yearly fee and for an introductory rate. The yearly fee is sometimes waived to lure the card holder to use the card more often. Better than the yearly fee being waived would be an offer of an introductory rate. For instance an introductory rate may be offered at 6.5% interest for 6 months. The credit card issuer uses that limited time offer and low interest rate to keep you using the card and to keep the balance high. The credit card issuer hopes that the card holder will use more credit because of the lower interest rate. Many times the card holder will also move around balances from other credit cards which also allows the card issuer to make more money from interest.

The best way to eliminate the interest associated with your balance is to continuously ask for an introductory rate. These special rates usually expire every 6 months. So just before it expires you can ask for an extension. When you achieve lower interest rates you can pay off the credit card balance much quicker. I have used this principle numerous times. I have even called 17 times in over a few week period asking for an introductory rate, only to be told “No” until the 18th time. Persistence is the key when dealing with creditors. Remember the worst they can say is “No”.

A powerful strategy to build credit is to get 3 to 4 good accounts. Don’t try to get too much credit because that can hurt you. Too little credit won’t help you either. The lenders, creditors, and even loan officers want to see that you have a good history at paying at least 3 accounts on time. Don’t have less than 3 good accounts because then you may not have enough credit for a bigger credit purchase. It takes time to build your credit so plan on paying on time, keeping a low balance, and not charging over your credit limit for about 18 months. By following that advice you can be assured that your credit score will go up. It will also show in stability in making payments on time which helps in getting those lower interest rates that everybody wants so desperately.

Since you are now on the road to good credit keep 3 to 4 accounts open so you can build a good credit profile. Remember the final lender or the decision makers for your loan may never see you, but they will see your credit. Decision makers for lenders like to see less risk to the creditor. The lender just wants to be paid back with interest and without having collection activities involved to get their money back. What level of risk you are will be determined by your income, bills and credit scores. Credit scores really being the most important because with a high enough credit score the lender will over look problems when lending. When getting credit it is important to remember keeping credit card balances low is one activity that will help raise your credit score. Always remember that the more credit you have the more that creditors and lenders will want to lend you. That is as long as you keep those balances low and payments on time.

If you have less than perfect credit you may need to get secured credit cards. These secured credit cards are easy to get. The reason that these credit cards are easy for everybody to get is that there is no risk for the bank. For instance you would put up $250 for security then you can have a secured credit card with a $250 available credit limit. You make payments just like a normal credit card for 12 to 24 months. At the end of that time period the secured credit card turns into a unsecured credit card. Most credit card companies then return the deposit. Apply for 3 to 4 accounts at the same time, keep the payments current and soon you’ll have great credit. This can take you from having no credit or bad credit to having fairly good credit in that 12 to 24 month period.

Jump start your credit by using a method is called piggybacking credit. It is in essence loaning someone your credit without the risk of co-signing. Typically it is used when a parent wants to establish credit for a child. This gives the child an advantage at starting life off in the real world. The parent places the child on an account to help build the child’s credit. The great news is it isn’t limited to parents piggybacking their credit. It can be a friend, family, next door neighbor, or even a boss. By piggybacking the account will show the original date it was opened on the credit borrower’s credit report. Therefore, if a credit card was 10 years old, the borrower’s credit report now shows an account to be 10 years old. This gives the borrower an immediate track record of credit. The borrower’s credit score immediately goes up. This is an amazing way to really jump start your credit and helps in qualifying for homes, cars, and even recreational vehicles.