Credit score?
I want to apply for a credit card, and it says one of the requirements is.... "I have a valid credit score that can be found at one of the major credit reporting companies. (In some cases, a valid credit report is sufficient to be eligible for a credit card.)" what does that mean? also, how do you start a credit report or score?
Public Comments
- It means that you need to have a credit history. You can get your credit report at www.annualcreditreport.com (free government site) if you don't have a credit card or student loan or auto loan, you probably don't have a credit history. You can start one by getting a gas card or a secured credit card (you send in a deposit and that acts as your credit limit... this is NOT a debit card)... pay on time (and in full if you can) and 6 months later, you'll have enough information to have a credit score. From there, you would be able to apply for a credit card with the company you're currently looking at. In order to have a good credit score, pay on time and don't max out your cards... try to avoid using more than 25% of your availbe credit limit.
- You start your credit history by obtaining financing from a lender who reports to one of the 3 major credit bureaus. Usually, the easiest place to start is with a credit card company. Over time, based upon a variety of variables (that differ between each bureau) a credit score is developed to let lenders know how much of a credit risk you are - i.e. the likelihood that they will get their money back from you. In some cases you may need someone with an established credit history to co-sign, until you can start your credit history.
- Your credit score is your FICO score. How FICO Scores Work * When you apply for credit – whether for a credit card, a car loan, or a mortgage – lenders want to know what risk they’d take by loaning money to you. * FICO scores are the credit scores most lenders use to determine your credit risk. You have three FICO scores, one for each of the three credit bureaus – Experian, TransUnion, and Equifax. Each score is based on information the credit bureau keeps on file about you. As this information changes, your credit scores tend to change as well. * Your 3 FICO scores affect both how much and what loan terms (interest rate, etc.) lenders will offer you at any given time. * Taking steps to improve your FICO scores can help you qualify for better rates from lenders.
- The 3 main credit reporting companies are Experian, Equifax and Transunion. Basically creditors want some sort of historical data so that can assess their lending risk in regards to you. If you have no credit it may be difficult for you to get a credit card with a low interest rate or a credit card at all. You can become an authorized user and build your credit that way or apply for a card that is easier to obtain with a higher interest rate to build credit. Just make sure you only charge what you can afford on that high interest card.
- Your credit score is a number (between 300 and 850) that is based on your credit history, which is a summary of the money that you’re borrowing and repaying. Your credit history includes credit card payments, student loans, cell phone bills, car loans, house payments, etc. As you borrow and repay money (through the things that I just listed), you will build credit. It takes a while to build strong credit. The most important thing in earning a good score is to pay every bill on time. This is absolutely crucial to building a high credit store. Secondly, don’t run up a lot of credit card bills. For example, if you have a credit card with a limit of $1,000, don’t spend $975 unless you plan to pay a lot of that off very quickly. If you have a low credit score, you might not qualify for things like credit cards, car loans, etc. If you do qualify, you will have a high interest rate, which means that you’ll be paying more. If you don’t have enough credit (or good enough credit) to qualify for a credit card, you can get someone with good credit to co-sign on the card with you. When I got my first credit card (I waited until I was 22 by using a debit card throughout college), I didn’t have enough credit, so my dad was a co-signer. Having that card will allow you to build your credit. Always be careful with credit cards. Remember that it isn’t free money. If you can, you’re better using a debit card. Using credit cards unwisely can create big long-term problems and ruin your credit score. You can get your credit history and credit report at www.freecreditreport.com. I hope that helps.
