No Credit
Can be as Bad as Bad Credit, Yes It’s True
By
Sandra Wellman
“I
do not need a credit line or credit card; I pay all my bills each
month with money.”
Is this you? Well then, you are one of the lucky ones. In
today’s world, we are almost required to have at least one major
credit card. If you apply for a job, apartment, mortgage, car
loan, or any other credit line you most likely will get rejected
if you do not have one or any credit history. Most lenders will
not give credit to anyone that has no credit history. The reason
is that we are expected to establish a credit line when we are
teens, and if we do not the lenders are often suspicious. The
lenders can only base their judgments of you on assumptions. They
have no previous record to go by. There are many reasons that
lenders will refuse to give you a loan if you do not have any
credit history. The best solution is starting up a line of credit
now, pay your bills on time and avoid making purchases on items
you do not really need.
Building
credit can cause stress if you do not know where to get started.
Creditors come in all forms and some of them are out to take you
for a ride, so this alone makes the struggle increase. If you do
not have credit, it is time to start building for a better future
as soon as possible.
Instead
of taking out a loan or applying for a credit card on your own,
you might want to take a trustworthy friend or family member.
Taking a friend or family member with you will come in handy when
the lenders say, “do you have a co-signer.” After you are
approved for a loan or credit card, make sure that you pay your
bills on time to avoid defaults on your credit files as well as
avoiding enemies. If you miss payments, the friend or family
member that co-signed your contract is obligated to pay your bill.
When
starting out if you don’t want to get a co-signer, you will have
to start small, like getting a gas card, department store card or
pay a small deposit on other services, like utilities or a cell
phone. The latter will return your deposit after 6-12 months of on
time payments and you’ll have a very good start to building your
credit. You can apply for something every 4-6 months and you
should be approved if you’ve been making your payments on time.
Making
on time payments is more important than the amount of credit you
have. I used to work for a cell phone company and they said
they’d rather give a “no deposit” account to someone who had
little, but good credit, than someone with more credit, but had
some late payments. Be organized with your bills so you will pay
them 5-8 days before they are due.
This
all sounds crazy if you think about it. People everyday are filing
bankruptcy, suffering debt issues, and so on, yet the system
requires us to establish credit at an early age in life just to
have basic things in life. The system is set up to get you one-way
or the other.
Therefore,
if you are building credit for the first time, make sure that you
do not overdo yourself. If you are moving into an apartment for
the first time, don’t go crazy on all the furniture and
appliances you will need to fill it. It can be fun spending money,
but you may get yourself into too much debt, more than your income
allows. Before you move out, have a budget already to go and try
to buy the small things you will need that you can store where you
are currently living. Once you are ready to move, look in the
papers for used furniture, tables, chairs, etc. Many people have
“moving sales” because they are moving out of state and will
not bring these items with them. You may get a good deal on a
whole “lot”.
If you are purchasing a car, make sure you
know what you are getting into to avoid future debt issues. When
purchasing a car, consider one that is inexpensive and economical,
to avoid overpaying for a fancy car that will only last for a
short time. None of us really needs a Mercedes Benz, but some of
us can afford it. If you can afford a Mercedes and know that your
future is prosperous by all means, apply for the loan. On the
other hand, if you see that your future is shaky and you do not
have the funds to support an outrageous lifestyle, then, go for
the Bug it is cheaper and it will save you from stress and getting
bad credit in the future.
Building credit is
building a better future. Nowadays it takes good credit scores to
purchase a home, buy a car, get a credit card and so on.
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