Credit Debt Advice.Net Intelligent Advice For All Of Your Credit & Debt Problems

Where do you start? This is the question many people who are just starting out in personal finance need answered. The problem of course is that you can’t get credit without a credit history but you can’t get a credit history without first having credit. Hmmm, quite the connundrum.

The very first thing to do is get a checking account and a savings account. Many banks offer free checking if you have a set amount automatically transferred to your savings accouny every month. The amount is usually only $25 and you don’t need to keep it in the savings account. You can simply transfer it back to your checking account (this can often be done online) or withdraw it if you need to. Just make sure you pay attention to the date that the automatic transfer occurs each month so it doesn’t cause you to overdraw your checking account.

While on the subject of overdrawing a checking account, it should be said that you should never allow that to happen. However, if it does happen, it will not affect your credit as long as you take care of it quickly. The bank will charge a fee, called an overdraft fee, if you withdraw more money than you have in your account. There are several ways to prevent this from happening. Many banks offer free overdraft protection, meaning they will transfer money from your savings account to cover the overdraft. Although it is free to start this service there is a fee for the transfer – usually $10 as opposed to$30 or more for an overdraft. Also, if you only use ATMs to withdraw cash, the ATM won’t allow you to take more than you have in your account. A checking account is nothing to be afraid of, just talk to a banker and have them explain the features. Keeping a checking account in good standing for a long time will prove that you are responsible as well as giving you a convenient way of making your payments once you get a loan or a credit card.

Now the best way to get your first credit is to get a co-signer. Unfortunately, not everyone can find someone who has credit that is good enough to co-sign and who is willing to do it. If this is your situation, there is still hope. If you have money to spare, you can deposit it into a savings account and use it as colateral for a secured credit card or a secured loan. Until recently, some banks would do this with as little as $200. Start with the bank where you have your checking account and ask if they will do this. If they won’t, try another bank.

Another good source for a credit reference is furniture and appliance rental centers. Most of these stores have rent to own programs so it’s just like paying in installments. Choose an item that you would like to have since you will be paying for it and keeping it. Get something that you can pay off within a year, don’t let them talk you into getting several items or expensive items that will take a long time to pay for. These stores usually don’t check credit even if they do report your payment history. Before you rent something, make sure they will report to one of the three major credit reporting bureaus; Equifax, Experian or TransUnion.

One more source for a good credit reference is used car dealers. They want to sell you a car so they will do all they can to find financing for you. New car dealerships that also sell used cars are some of the best sources for used vehicles. They tend to be more honest than some used car lots, they can find lenders and they get the used cars as trade-ins so they are just trying to get rid of them, not make a big profit on the sale.

A few more credit sources worth mentioning are; utility companies (gas, electric, phone), landlords (ask if you can use them as a credit reference) and stores that offer in-house credit. Any little bit will help your credit and before you know it, you will be able to get all the loans and credit cards you want. Just make sure you never let your debts get out of hand and always pay on-time.