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How to correctly and quickly build your credit history!

1. Credit Cards – The easiest and cheapest way, but the slowest. We open “secured credit cards” in three or four banks. Full-value credit cards will most likely not be immediately opened for you; therefore, for starters, cards that are secured by your deposit. The meaning – you give the bank your money, they put it in a special account and within this limit give you a credit card. After a year, as a rule, the deposit is returned to you and you get a real credit card. If possible, open such cards not for 100 dollars, but more (1000-3000 dollars).

Why 3-4 cards and why a large amount?Other banks will see that several banks have entrusted you with loans, not just one, and for a fairly good amount. Bottom line: in a year you have a stable credit history, several open lines of credit and a good credit limit!

2. Car on credit – The fastest and easiest way, especially considering that there is no way in America without a car … But, unfortunately, its not cheap. There is such a good phrase: “the first loan is always bought …” And it is not cheap because when you buying your first car on a loan, you overpay the interest rate. Unlike an ideal credit history, when the interest rate can be from 0% to 5%, at the first car loan it will reach 18% (average 9-18% per annum).

When financing, you will need an initial payment of $1,500 or more, depending on the value of the car. In this case, my recommendation is to take an inexpensive, used car (2-3 years, up to $ 20,000). In this case, you have a car with a guarantee, you do not think about breakdowns and service, build your credit history and do not lose a lot of money when selling (since the main losses on a car occur in the first 2-3 years). A year later – to sell this car and easily lease a new car. There may be many opinions, but in  mine opinion , leasing- is the most financially beneficial tool for owning a car! I will warn you against buying a car on lease without a sufficient credit history – you will need a large initial payment, high interest rates and a limited choice of brands (Lexus, Mercedes) …

MANDATORY:

    • keep track of your credit cards
    • make sure it is not delinquent.
    • do not fill out a lot of different credit applications to get new loans or credit cards for shopping such as Macys, Nordstorm, Wallmart, etc.
    • do not close your oldest credit cards

WHAT IS IMPORTANT FOR BANKS:

    • the term of your credit history (then more then better)
    • the term of the very first open loan (never close the very first credit card, put it in the bedside table, setting up an automatic message in advance, so as not to forget to pay the annual installment and receive a late payment)
    • no overdue payments and collector records – the number of your loan requests (every time you try to get a loan or a credit card, banks send a notification to the credit bureaus) – then less then better
    • % of your credit cards filling – then less then better …
    • The “credit score” number itself is absolutely not an indicator of your credit history! You can open one “secured credit card” and in six months you will have a 730 credit score… All the factors listed above are important …
    • For a car loan or car leasing, it is also important that you have a car loan before this! This greatly increases the chance of a positive decision and good credit conditions! If you did not had a car on credit before, you are considered by banks as a “first time buyer” and the chance to get a car on lease or the minimum interest rates on a loan is almost impossible. Therefore, do not be surprised if you see 720 on Credit Karma, but you are really denied everywhere, and at the same time each of your requests further aggravates the situation!

ADDITIONS:

– open a free account at www.creditkarma.com and constantly track your credit history and changes. Checking the credit history on this site is not an official request and does not affect your history in any way, although it is not a 100% reliable source of your “credit score” (exactly as numbers).

– download the BillGuard mobile application (available for iPhone and Android), which allows you to automatically track all charges from your credit cards and debit accounts and remind you of the due dates of credit payments.

– open a company for yourself, its opening and maintenance costs a penny, but believe me, you will need it very much in the future!

P.S. This vision is based on my personal experience and the experience of several hundred of my clients who applied for a car purchase and whose credit history I analyzed …

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