How to Establish Credit

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After Graduation, you may be interested in establishing your credit. Good credit will become very important when you decide to make a large purchase down the road, such as buying a car or home. Below are some suggested steps for establishing credit for first time applicants:

Open a bank account or join a credit union.

Apply for a credit card. You might ask your bank or credit union if they will issue you one. If not, try a department store or a gas company for a credit card.

Consider obtaining a secured credit card. This option may come in handy if you are having difficulty obtaining the above. These credit cards are based on a required deposit in a savings account.

Be patient, keep the balance low and make your payments on time. Make sure you can pay off the balances on all the items you purchase. In other words, don t purchase beyond what you can afford.

After three months of responsible payments, consider applying for one of the four largest bank credit card companies: Visa, MasterCard, American Express, or Discover.

Do

Report a lost or stolen card immediately

Establish limits on your credit card by limiting a single purchasing amount above a certain dollar limit

Check your credit card activity often using the Internet rather than waiting for the paper statement

Check your credit report from time to time to check for any inaccuracies



Don't

Overdraw your bank account

Miss or pay late any and all creditors

Lend out your card to anyone

Give out your credit card number to anyone unless you made the call/contact yourself

Cancel your credit card even if you don t use it





Be aware of the new Federal rules for credit card holders. Most significantly, the age limit for issuing a card without proof of ability to pay or having to have a cosigner on the card, rose from 18 years to 21 years.

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