This week we have been reviewing ways to obtain your first credit card so you can establish credit. Just like getting a good job, lenders require experience. The lenders want to see some credit history. If you do not have credit history, they want to see a history of fiscal responsibility. This can be proven by showing stability. They consider employment, residence, bank accounts, and utilities. If these factors are not enough to obtain some credit, there are three other ways. First, your local bank may offer a credit line, using your checking or savings account as collateral. This is a secured credit line. Meaning, you have money on deposit at the bank to guarantee the account. Credit lines are reported to the credit agencies, so this will help. Next, try a secured credit card. It functions in the same way as a secured line of credit. You must deposit an amount of money equal to the credit limit. Again, the money is collateral for the account. Like a line of credit, your transactions using secured credit card are reported to the credit agencies. This will help you establish and build credit. And lastly, and I do mean lastly, is a 90 days same as cash, or similar offer. This type of loan carries a little less risk for a lender than a credit card, so they may be more willing to offer this to you. Because it is a loan, it should be reported to the credit agencies. Be sure to read the fine print and confirm whether or not it is reported. Like a credit card, this type of arrangement carries significant risks, so be careful. If you do not pay off this type of loan in the designated time period, interest will be charged retroactively. Meaning, you will be charged interest from the day you received the loan. Even worse, the interest rate is extremely high. Again, I would consider this as a last resort only. If you have a financial question for Ross, you can use the Marino on Money page.
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