Sunday, April 20, 2008

How to build your credit history.

You are new in the country and you want to build your credit in order to get access to credit to buy a house or car, what is the best way to do it?

The answer is not easy, since it requires time, here are the simple steps:

1. Get a bank account (checking or savings)
2. Pay your bills on time.
3. Be patience.

Now, notice I don't recommend getting a secured card or getting a car right away, why? because since you don't have credit history the interest rate is going to be very high, I recommend to wait at least 1 year before trying to get any type of credit.

Now a year has passed, what type of credit to get? If you are responsible with credit cards (paying them off at the end of the) then apply for a credit card, if you are not, avoid them, it is a trap and you should avoid it.

You can get instead a car loan, this will help build your credit. Try to give the biggest down payment you can, the lower the amount in the loan the better interest rate you can get and make sure you shop around, you won't believe the interest rates some dealers try to give you.

One last piece of advice, try to bank at a credit union, credit unions are usually small, they get to know you and usually take into consideration your history with other accounts when evaluating to give you credit or not.

Good luck and please be always careful when dealing with credit, this is a decision that will affect you life in this country and should be done carefully.