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Building Credit
Many people prefer to manage their personal
finances entirely with cash,
but having credit
is essential for buying big ticket
items
like cars and houses. If you
are young and
just starting our, a recent immigrant
to
this country, or have lost the
wage earning
spouse in your family, then you
need to build
your own credit history before
you will be
approved for large purchases.
Building your credit takes time
but can be
done easily by following a series
of steps:
- Open checking and savings accounts at your
local bank. Every creditor wants to see that
you have an establish banking relationship
even though savings accounts are largely
irrelevant.
- Get a debit card tied to your checking account.
Debit cards look and work like
credit cards
except that they directly draw
from your
funds on deposit just like
checks.
- Get a store credit card. Stores are more
likely to issue cards to people with little
or no credit history if it will help them
make a sale.
- Have the bank at which you have your checking
and savings accounts issue
you a credit card
with a low limit.
- Develop a history of using and paying regularly
on the card to demonstrate your credit worthiness;
after a year, ask them to increase your credit
limit.
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