The best ways to start your credit score

February 6th, 2013 Sabrina Kurka

One of the “twists” in today’s financial world is that you need to have a good credit score to get a loan…but to establish a credit score, you need to have a credit history! If you don’t have any credit history, then you might not have a credit score, and might not be able to get a loan.

Fortunately, there are ways to get your credit score established and ways to keep it at a high level. Take a look at these three keys. The better your credit score, the better interest rates you’re likely to receive.

Key 1:  Apply with a co-signer for a credit card.

If you’ve never applied for a credit card or a loan, chances are you don’t have a credit score. One of the best approaches to overcoming that obstacle is to have your parents co-sign on an application for a small, personal credit card.  Then, once you receive the card, make sure you make the full monthly payments to keep your credit score high.

Key 2: Take out a small installment loan.

Installment loans – even small ones – can help create your credit history by showing up on your credit report. Many banks are willing to make small installment loans with fixed payments, and you can also have someone co-sign with you. If you always make your payments on time, an installment loan will help establish your credit socre and might even bump it up on the scale.

Key 3: Apply for a retail credit card.

Retailers are often very accepting of offering a credit card to people with no credit score. Truth is, since their credit card helps build their sales, they often have less strict standards when it comes to approving applicants. So, even if you don’t have a credit score, you have a fairly good chance of being accepted for a retail store credit card, and as with other cards, you can have your parents or a friend co-sign with you.

As you can see, even without a credit score, there are ways to build one. Keep in mind, once you establish your credit score, it’s important to protect it and keep it at a high value. Always pay your credit card bills in full on a monthly basis, don’t apply for too many credit cards or loans, don’t run up your credit limit, and never miss a payment. That’s how you keep your credit score high and financially helpful.

About the author

Sabrina Kurka is a Personal Banker at MidWestOne Bank.

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