How To Obtain Credit

Credit beginners usually have but one question, which is, “How do I get credit?” All the details about getting credit will follow, but the simple answer is, “Apply for it.”

Where to Apply For Credit
The best way for a beginner to get credit is by applying through a bank that specializes in credit cards for those who are just starting out. If you already have a checking or savings account, find out if your bank offers credit for people without a credit history. If the answer is yes, then you’re in business. However, if the answer is no, there are two things you can do.

You can often obtain a department store credit card or an oil company credit card easier than a major credit card, like Visa or Mastercard. Be careful, though. These cards may be easy to get, but they also come with a higher cost.

The interest rate, which is essentially the cost of carrying a credit card balance from month to month, is higher on department store and oil company credit cards. On the bright side, having a positive history with one of these cards helps you qualify for a major credit card later on.

You can also apply for a secured credit card. With this type of credit card, you first make a deposit into an account. The amount of your deposit will be the credit limit on your credit card. Some secured credit cards will convert to non-secured cards after a certain period of positive credit history.

How Old Should You Be?
Although most people believe that you must be eighteen years old to obtain credit, technically this is not true. What these people are thinking about is the age of majority at which a person can legally sign a contract. This age, which varies by state, is usually 18. Teenagers under the age of majority can usually obtain store credit from certain stores that cater to them. However, major credit cards, like Visa and Mastercard typically do not offer credit to applicants that are underage.

What to Watch Out For
Avoid making several applications for credit. Each will show up on your credit report making it appear as if you are desperate for credit.

Be wary of credit card offers that guarantee approval regardless of your credit history. Offers like this are usually scams that end up costing much more than you spend.

Once you obtain a credit card, it will be important for you to use it wisely. Building Credit guides you through using credit responsibly.

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