Building Credit
Is using credit good or bad? Your answer is probably influenced by your family or past experiences. While having a credit card may not be a necessity, it’s a good idea to develop a positive credit record. Landlords, employers and insurance companies all use your credit history to judge your character and to decide whether or not they want to take a risk on you and how much they’ll charge for premiums and monthly payments.
Luckily, taking out a credit card isn’t the only way to build a positive character reference and establish credibility.
- If you’re responsible for some of your own bills (like a cellphone) ask your provider to report your positive payment history to the credit reporting agencies.
- Talk to a bank or credit union about opening a checking account, savings account or borrowing a small loan. If you borrow, instead of spending the money put it in a savings account and have the monthly loan payments automatically debited from that account. You won’t be tempted to spend the money and you’ll have a positive payment history that’s reported to credit reporting agencies.
- If you’re over 18 and a credit card is an option you’re interested in, look for one with a low, fixed interest rate, no annual fee and clear explanations of fees. Once approved, use your credit responsibly by paying the bill in full, making your payments on time and never using your entire credit limit.
- Once you’ve established credit, it’s important to maintain a good credit record and avoid racking up too much debt. Remember, it’s best to save up for purchases. If you decide that using credit is necessary, keep these tips in mind for keeping debt under control.
- Try to make a significant down-payment. The more you pay in advance, the less you’ll have to borrow and pay back, with interest.
- Pay all your bills in full and on time. Making on-time payments is one of the easiest ways to maintain a good credit score and avoid paying more in interest charges.
- If you can’t pay the entire bill, always pay more than the required minimum monthly payment due.
- Borrow or charge only what you can afford to repay.
- Shop around for the lowest interest rate to get the best deal possible.
- Avoid payday and high-interest cash advance lenders. Payday lending isn’t illegal in Oklahoma but it’s not your best credit option. Payday loans aren’t a credit building tool; they’re short-term loans that can be borrowed without passing a credit check. In theory this may seem like a good option, until you realize you’ll be charged up to 400 percent interest on that small loan. For your best loan options, talk to someone at your local bank or credit union.
