Tips for Establishing Credit
As you’re thinking about purchasing a home, you will need to consider the important role your credit score will play in your ability to secure a mortgage loan. If you have little to no credit currently, the tips below can help you get started and on your way down the path to homeownership.
1. Open a checking or savings account. Lenders typically request bank account numbers on credit applications. Open a bank account and keep it in good standing to show lenders that you can responsibly manage your money.
2. Apply for an entry-level credit card. Entry-level credit cards do not require a long credit history for approval. There are various types to consider, including secured credit cards, student credit cards, and store credit cards.
- Secured credit cards require a cash deposit, which works as collateral if a payment is missed.
- Student credit cards give younger cardholders a way to build credit from scratch.
- Store credit cards help to save money, especially if the store is frequented often—giving those with little to no credit the opportunity to prove they can handle their money correctly.
3. Get a co-signer for a credit card or loan. As you know, applying and obtaining a credit card or loan can help you establish good credit as long as you pay on time and do not miss payments. A co-signer with good credit can help you qualify or acquire better credit terms. If you choose this route, the co-signer will take responsibility for payments. Therefore, the credit history will be reflected on both of your reports.
Establishing credit is crucial to your everyday life as it makes it easier for you to purchase items—along with saving you money in the process. Specifically, qualifying to make big purchases like buying a home are determined by your credit score. Each of these tips, along with the responsible use of credit, can help you build your credit over time.
Reach out to one of our Mortgage Loan Originators today with any questions or to learn more!