How to Build (new) or Rebuild (existing) Credit

Mastering the Basics One of the keys to mastering personal finance, is to learn how to establish and maintain an above average FICO Score. I speak more about FICO scores in the course on Understanding Your Credit.

Let’s face it, if your credit is less than perfect, or you have no credit at all, life can be downright depressing. “How can you get credit when no bank will approve it because you don’t have any?!” I hear this a lot from the youth I mentor. I know and understand it’s difficult; however, there are ways to get over this obstacle in life. The first step is to apply for a secured credit card. Now, most of the card companies will want you to have some source of verifiable income, make a deposit into a savings account as collateral,pay an annual fee, and may check your credit qualifications–don’t worry about it. Make sure to read the fine print and pick the one that gives you the lowest interest rate for you to work with. I’ll list links from a credit expert for review on three level credit card companies at the bottom of this blog post.

I remember twenty years ago, the new credit card companies had people literally chasing you around campus to take their applications and apply for their high interest cards. I believe the universities may have banned that aggressive practice now. Back then I heard horror stories and was always angry about being declined for a credit card because of no or little credit history when they were at my campus offering applications left and right. It seemed like they were setting you up for failure and disappointment. You can imagine once I got approved for my first credit card how happy I was even though I didn’t have a clue about an APR or FICO score. I only knew that I had to pay on time every month to keep the card open and get a limit increase. I used the card(s), most of them department store credit cards like JCPenney, Sears, mail order catalogs like Fingerhut, and always kept a balance on them. I didn’t receive my first major bank credit card until I started working for one. (Go figure… 🙂 ) Having a credit card is a good thing, if used properly and will come in handy in establishing a credit history and/or rebuilding one. A credit card is not the same as a debit/check card, although both can be used for (POS) purchases. Practically every company requires a major credit card before they let you get a rental car or a hotel room. Of course back then they had very stringent rules and would never accept a debit card at rental locations. Now, a debit/check card linked to a checking account is acceptable; but be prepared to have them place a deposit hold from $350.00 to $500.00 dollars until you return their rental vehicle or for incidentals before you check out of their hotel room. Yes, there are some places that will take cash only; however, once your money is gone and you aren’t happy with the service, there’s not much you can do but complain or give a bad survey.

So as promised, here’s the list from Beverly Harzog to build or rebuild your credit history, the ones I picked are companies that report to all the CRA’s as “secured” instead of “unsecured” credit, which will help to establish your credit faster, if you qualify:

#1: Wells Fargo Secured Card

You get a variable rate of 18.99 percent. The annual fee is $25 per year. If you use the card responsibly, you’ll be considered for an unsecured credit card.

Credit bureaus: Reports as secured.

#2: BankAmericard Secured Visa Credit Card

You get a variable rate of 20.24 percent. The annual fee is $39 per year. If you use the card responsibly, you’ll be considered for an unsecured credit card.