We are living in a credit based system. Good credit means more than cash in many occasions. Having great credit history opens doors to all kind of ventures. It is also very important in
Financial Aid. Without good credit history it is hard to obtain Student Loans.
The same thing applies to Parent Loans. Your parents will have hard time borrowing money without good credit history.
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In order to build a perfect credit history and achieve high credit score students need to understand what credit and credit history is first.
The best place to research is our Understand Credit History page. Once you get familiar with the concept of credit and credit history
you can dive into tip and tricks for building a perfect credit history and a high credit score.
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It is well known getting credit can be a catch 22 deal: if is not easy to get credit if you do not already have it, and if you already have it then you do not need it.
Students that have never borrowed need to build credit over time so that they can qualify for larger loans when the time comes.
Young students that do not have a credit history have a problem with the lenders, because the lenders do not know whether or not they should give them money.
Without any credit history, they can not figure out which student is responsible and which one is not. Students must build credit in order to prove your credit worthiness.
This is especially true when applying for Private Student Loans.
Building good history is actually easy when you are starting from scratch. The only hard part is the time. It takes few years to build up your credit profile and you must be patient and
responsible during that time.
The following paragraphs are designed for students who do not have history at all and are starting from scratch. Tips included here are not designed for those who
already have credit history problems.
Check your credit report first before you apply for anything. Make sure to check it at all major bureaus: Equifax, Experian and Trans Union.
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Find out what kind of information is contained in your credit report at each of the three. You are entitled to a free annual look at your reports from
AnnualCreditReport.com.
In case you find a mistake in your credit report and you feel it is or it could affect your credit history make sure to dispute and fix the information
by contacting credit report bureaus.
This should be your first step. If you are serious about your credit history you must have a checking and a savings
account setup. Lenders see bank accounts as signs of stability and responsibility.
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Start by applying for a Secured Credit Cards.
With those cards you can make a deposit to your account and have a credit limit in the amount of your deposit. The bank has little risk and you build your credit slowly.
This technique is usually a good start with when it comes to Credit Cards.
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- 0% APR on purchases for 6 months
- No annual fee or monthly fees
- Your credit is not a factor!
- We report to all 3 major credit bureaus
- Lifetime credit lines up to $10,000
- 25 day grace period
- Free fraud protection against unauthorized use
- No penalty APR
- Use the card everywhere you see the Visa/Mastercard logo
For your first few credit accounts user a co-signer. Banks and lenders will review the co-signer's existing credit and if it is good enough they will approve you based on
someone else's credit history. The co-signer vouches for you while you build your credit.
This is one of the fastest techniques to establish a credit history. You borrow another's record, either by being added to a credit card as a joint account holder or by getting someone to co-sign
a loan for you. Being able to partner with someone can allow you to qualify for loans you might not otherwise get. The loan will show up on your credit report and, if you pay it off responsibly,
it will boost your credit score.
The easiest time to get a card is while you're a college student. All those lenders lurk around colleges looking for new customers.
They are willing to take risks when you are in college and they are not so risky when you graduate. This is because they know that your parents willingness to pay off
your bills in case you would get in trouble.
Many retailers offer programs for modestly large purchases like furniture, clothing, electronics, or even gas station cards. All these programs can be easy to qualify for and they
are very helpful in building credit. The only thing you have to find out from the retailer before you sign up is his reporting strategy.
The retailer has to report your loan to the major credit reporting companies. Some retailers do not report, so make sure to sing up only for those that do.
It is very important to mix different credit types in order to receive high credit score.
Those credit types are: revolving accounts like credit cards, lines of credit and installment accounts: auto loans, personal loans, mortgages.
When you apply for a installment loan keep the duration short for about a year or two.
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In order for the credit scores to be generated, students have to had credit for at least six months. One of the accounts has to be updated in the past six months.
User your cards often in order to keep your report updated regularly. This will keep the lender interested in you as a customer. In case you get a credit card and never use it,
the issuer could cancel the account and your effort will be lost.
Quick Tips:
Do not charge more than 30% of the card's limit.
Do not charge more than you can pay off in a month. You don't have to pay interest on a credit card to get good credit.
Pay the bill, and all your other bills, on time.
When you get credit make sure the lending institutions report your timely payments to the credit reporting companies.
In general the more reputable the institution the better credit reporting.
There are two most important factors in creating a credit score:
Whether you pay your bills on time.
How much of your available credit you actually use.
You must pay all your bills on time, all the time. Set up automatic payments or reminders to help you pay.
You can not max out any of your credit cards, or even get close to that. Make sure to keep your credit use to less than 20% of your credit limits (10% is better).
This will help you get the best possible credit scores. Also, you do not need to carry a balance on a credit card to have good credit scores. Paying your bill in full each month is the best way to
build your credit.
As you can see there are no hard rules to follow, try being flexible and read as much information as possible about financial aid. Choose a career you like and not, because everybody is doing it,
or because it pays well. Good luck on your road and check the site for more information.
We advise our financial aid candidates to use our tools below and see how much college is going to cost, how to plan or save for college, how to find financial aid, and calculate
loan amounts.
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