Establishing Your Credit

Establish your creditAs a teenager and young adult, we learn that credit is very important in the United States. You need credit for everything! The reality is that while everyone requires you to have some sort of credit, getting started is quite difficult! Some people may recommend that you apply for a store credit card. Some store credit cards are easy to get as the stores want you to spend money there.

The problem with store credit cards is that if you’re using it to establish your credit, you’re creating a lot of debt for yourself in a store that you may not purchase that much in. The idea behind credit is to prove that you’re able to make payments. Getting a store credit card and racking up a whopping $50 balance is not going to show anything.

There is a couple other ways to establish credit if you have none. One would be that clunker that you paid $500 for out in the driveway. Some banks or credit union will allow you to do a SMALL secured loan, using that car as collateral. If your car bluebooks at $750, take out $500. A second way is to save up some money and purchase a CD (Certificate of deposit). Depending on the bank, there are different minimums. The easiest way is to find a bank or credit union that has a $500 CD. Once you’ve taken out this $500 CD, request to take a loan out against it. You’ll get approved for this loan guaranteed as you’re not really borrowing from the bank, you’re borrowing against your own money! The bank has no risk at all since they’re holding the CD. In this case, your payments would be around $45.

Once you’ve gotten this loan, you can do whatever you want with the money. You can spend it, or you can save it. One smart idea is to take this money, stick it into a account, and set up a automatic payment with the loan that you just took out. You may have to contribute a few bucks of your own as the bank does charge a little interest, but this shouldn’t be more than $10-15 at most on such a small amount. By doing this, you don’t have to worry about making the payments, and your credit will show as perfect as all payments will be on time. You also won’t have to worry about having the money to pay the payment when the time comes each month.

If you go the route of the CD, another option is to get a $600 CD, take out a $500 loan on it, take the cash and purchase another CD. You’ll have to come up with the funds to make the payments, but at the end of the CD term (once the loan is paid off), you’ll have $1,100! It’s a interesting way of saving. The bank pays you interest on the CD. The downside to having a CD is that it locks the money away for a period of time. For first time credit establishing, getting a 6 month or a 1 year CD is best.

This route also works for those with bruised credit! One individual had a credit score of 510, and 4 things in collections, and one judgment. He had a CD for a year, made the payments, and somehow his credit score was raised to 620 after a year. He still had the same collection accounts and judgments although it’s unknown how it got that high with that many derogatory accounts.

Once you’ve established your credit, it’s very important to keep it good. Don’t overextend yourself, it’s very easy to do. The best thing you can do is avoid high limit credit cards! Keep it within reach. If you must use a credit card, get the best deal possible. Don’t ever choose a credit card that requires a “application fee”.

Good luck and remember, take care of your credit. It’s the best thing you could ever do.

Cash Advance Loan

Cash Advance LoanA cash advance loan is basically for people who have a low credit score and are tired trying to to obtain a loan from traditional sources with little success.

Lenders that provide a cash advance loan. They know that having a low credit score does not mean that a person is not able to repay a loan. And so it’s really not surprising to find that the priority of these lenders is to help people get access to loans with no appraisal of creditworthiness. The cash from these  loans are readily  available, usually within 24 hours after the loan application is approved and the papers are processed.

Approval of these loan products is totally dependent on your current financial position, that’s, if what you are currently earning is enough to help you pay back the borrowed funds when payment time comes.

Because these loan products are easily available, you usually pay for it with much higher interest rates. If you do the math, you could be paying as much as 300% in annual interest rate. There are states, however, that have laws covering cash loans, and these laws have rules covering how much a lender can charge its clients in interest rates.

Before you apply for a loan, make sure to read the laws on cash loans in your state. It will help you to find the best loan providers. You don’t need to worry about finding cash loan lenders. There are many of them out there just as there are many banks. You just need to find the one that gives you the best loan terms and interest rates.

You could apply for a loan individually with three lenders or you could send an application one time with a portal site and wait for a response from different lenders.