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10 Easy Ways to Build a Credit History|
10 easy ways to build a credit history
by Gail Vaz-Oxlade, for Yahoo! Canada Finance
Monday, August 30, 2010
I am constantly astounded at the number of people I meet who are in a bind
because they have no credit history and can't borrow money. This is something we
used to associate with older, widowed women who have been cared for by loving,
controlling spouses. But that's just part of the story. Not having a credit
history isn't the domain on slightly out-of-touch women; there are men out there
who haven't got a clue because their wives do EVERYTHING. And it isn't the
exclusive territory of our elders; there are young, professionals who haven't
bothered to establish their own credit identities.
1. Get a Secured Credit Card. The fastest, cheapest and easiest way to establish a credit history is with a secured credit card. Since there's no risk to the lender because you've put up the cash to cover your balance, secured cards are great for new borrowers or people trying to re-establish credit after a bankruptcy.
Lenders usually want twice the credit card limit. So if you want a $500 credit limit, you'll have to ante up $1,000. Once you've established your ability to manage the card - anywhere from six months to a year - you can ask for the security requirement to be dropped and your deposit returned.
2. Get a gas or department store card. Gas or department store credit cards are often easier to get and can be good ways to establish credit. You must pay your bills in full and on time because the interest rates on these cards are often astronomical. But as long as you don't miss a payment - which you never will, right? - it makes no difference what the interest rate is. Use these cards wisely and they can be a great toe-hold.
3. Borrow for an RRSP. Borrowing money to contribute to an RRSP is a great way to establish a credit history. While the RRSP cannot officially be used as collateral for the loan, lenders know where to find their money so approvals come more easily and the interest rate won't be horrendous. Make sure you only borrow as much as you can afford to repay in six months. How much you borrow doesn't mean much; repaying the loan quickly without a misstep does. Don't let anyone talk you into more. Once the six months are up, use the amount you were using to repay the loan as your month retirement savings contribution. Now you're building up your assets, which will be good for your credit history too.
4. Get a co-signer. While I'm not a big proponent of signing
on for other people's debt, if you can find someone who loves you enough to put
their credit history at risk for you, do it. Make sure the loan history is being
reported in your name and not the co-signer's.
Thursday, September 02, 2010
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