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.

Online Loans and Their Difference with the Regular Loans

Humans are entitled to make mistakes; we are, after all, are only humans. So it is pretty understandable and logical if you suffer from a financial chaos. For instance, you just realized that you only have $5 in your pocket and yet your payday is still a week away. You haven’t filled the gas and the fridge is empty with no food left. Will you let your family starve to death? I don’t think so. Going to the bank is impossible because you know that you won’t get the loan that you want from them. So, the only logical way is to hit the internet and have the online loan.




Online Loan vs Bank Loan

What is an online loan, anyway? How is it different from the regular loan from the bank? Well, everything about the two loans is completely different. For a starter, the time length. The online loan is applicable for a short span of time – a month will be the longest. The bank loan, on the other hand, is designed for a long-term period with 12 months being the shortest.  Second, from the amount of money being borrowed. In the online loan, you only borrow a couple of hundred dollars – $1000 is the maximum amount. However, in some providers, you are allowed to borrow up to $1500, especially if you are a regular- meaning that you often borrow from them. In the bank loan, the minimum money to borrow is around $5000. So, if you only need to borrow, let’s say $200, for the next two weeks, you know which type of loan to take.


Other Things to Know

Regulations and process are another different things about the loan. In the bank loan, you will be dealing with tough regulations and complicated process. You will have to go through a background check, credit check, and so many others. And after you have waited for days, it is not a guarantee that you will get the loan. Such a bummer, huh? Moreover, never expect to get the loan if you have a negative credit history or record. The banks will never allow you if your credit isn’t promising.


Through the online loan, however, the process is somewhat easier and simpler. No need to wait for days. There is no complicated processing either. All you have to do is to go to the official website, fill in the already provided form, and send the application. Just wait until they get back to you to notify you whether you get the loan or not. Moreover, the provider won’t care whether you have a perfectly clean and flawless credit record or not. They don’t even care if you have a standard good record. All they care about is that you have a job and you will be able to pay the money back on time. Fail to do so and your debt will be the rooftop high.


That’s why it would be wise if you can borrow just as much as you need – don’t exceed it. Having the online loan where you can get fast money is nice but there is a hidden trap if you aren’t careful about it.