How to Establish Credit History
Open a bank account., Establish consistent sources of income., Don’t move around too much., Apply for your first line of credit through your bank.
Step-by-Step Guide
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Step 1: Open a bank account.
When a person with no credit applies for a line of credit, the creditor must look to factors other than the applicant’s credit history and score to decide whether to issue the credit.
Although not having a bank account doesn’t necessarily mean you don’t have money or legal sources of income, it is far more likely for criminals and the impoverished to lack a bank account.
Since criminals often don’t pay back loans and the poor can’t pay back loans, not having a bank account makes it much less likely you’ll be granted a loan.It’s best if you have both a savings account and a checking account.
Almost every major bank offers free personal checking accounts and savings account with low minimum amounts. -
Step 2: Establish consistent sources of income.
Any potential creditor will want to know you can pay back the credit extended, and they’ll need more substantial verification than your word.
Therefore, you should establish consistent sources of above-the-table income before you apply for a new line of credit.Although anything with a paper trail will be helpful, the best source of income verification is a paystub.
Paystubs show wages before and after taxes, hourly rate, hours worked, and total income year to date. , When you’re applying for some types of credit, like home loans or auto loans, it’s common for a creditor to ask you for your residence history.
The more often you move around, the less stable you seem, and the less likely to be extended a great deal of credit.Banks usually ask for three to five years of your residence history when you’re purchasing a home.
If you’re getting an auto loan, you’re most likely to get a lot of questions about your residential history if you’re getting a loan from a “buy here, pay here” lot, and not getting a loan through a conventional lender, like a bank or credit union. , Whether you’re getting a credit card, home loan, auto loan, or personal loan, if you’ve got no credit history, you should apply through your bank before you go anywhere else.
They’ll have a better idea of your reliability than any other potential creditors would. -
Step 3: Don’t move around too much.
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Step 4: Apply for your first line of credit through your bank.
Detailed Guide
When a person with no credit applies for a line of credit, the creditor must look to factors other than the applicant’s credit history and score to decide whether to issue the credit.
Although not having a bank account doesn’t necessarily mean you don’t have money or legal sources of income, it is far more likely for criminals and the impoverished to lack a bank account.
Since criminals often don’t pay back loans and the poor can’t pay back loans, not having a bank account makes it much less likely you’ll be granted a loan.It’s best if you have both a savings account and a checking account.
Almost every major bank offers free personal checking accounts and savings account with low minimum amounts.
Any potential creditor will want to know you can pay back the credit extended, and they’ll need more substantial verification than your word.
Therefore, you should establish consistent sources of above-the-table income before you apply for a new line of credit.Although anything with a paper trail will be helpful, the best source of income verification is a paystub.
Paystubs show wages before and after taxes, hourly rate, hours worked, and total income year to date. , When you’re applying for some types of credit, like home loans or auto loans, it’s common for a creditor to ask you for your residence history.
The more often you move around, the less stable you seem, and the less likely to be extended a great deal of credit.Banks usually ask for three to five years of your residence history when you’re purchasing a home.
If you’re getting an auto loan, you’re most likely to get a lot of questions about your residential history if you’re getting a loan from a “buy here, pay here” lot, and not getting a loan through a conventional lender, like a bank or credit union. , Whether you’re getting a credit card, home loan, auto loan, or personal loan, if you’ve got no credit history, you should apply through your bank before you go anywhere else.
They’ll have a better idea of your reliability than any other potential creditors would.
About the Author
William Griffin
Brings years of experience writing about lifestyle and related subjects.
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