Getting your first credit account
The Great Task of Establishing Credit
“How do I establish credit, when I don’t have a credit history”? This is probably the most commonly asked question
by most consumers looking to open a credit account. Not having credit can be just as difficult as having bad credit
unless you know how to go about proving yourself to a potential creditor.
The Craziest Catch of the Credit Game
How can you or anyone get credit if nobody is willing to extend you credit, simply because you don’t have any
A good place to start is by obtaining a letter of credit from a company that you have been dealing with already
that does not report to the credit reporting agencies. Many local shops or merchants you already do business with
are a great place to ask.
Another example would be your electric company. It is possible to contact your electric company and request a
letter of credit. They are likely to require that you have had an account with them for at least a year as with
most companies that you are asking for a letter of credit. Your cable company may be another option for a letter of
recommendation for credit. If you have had an open account for at least a year and have made on time monthly full
payments, without payment arrangements, these two companies are good candidates to provide you with a letter of
recommendation for credit.
To establish credit either with or without a letter of recommendation for credit, you could also start with your
banking institution. All banks offer credit card and loan accounts. If you have banked with the institution for at
least a year (sometimes 6 months) they may strongly consider extending you a line of credit. In the beginning of
any credit account, your interest rate may be high, but don’t despair, after your first positive review in about 6
months, the interest rate may fall dramatically as well as your payments if you have been making minimum
Just to get you started. Your new account credit line may be very low. After about 6 months of on time payments,
your lender may review your account and extend you a larger credit line. The smartest technique is to start with
baby steps. Start with just a small account, pay the accounts regularly, get used to the monthly obligation, and
make on time monthly payments before jumping into any other credit account(s) or obligations.
The only thing harder then building good credit is getting rid of bad credit. Once you miss a payment or worse, a
pattern of missing payments, your credit report is going to reflect a poor credit history and it will haunt you for
up to 7 years. Bad credit will not simply go away because you finally pay your creditors, so the best advice is to
always make sure your payments are on-time.
Once you have established your credit rating and histories as someone who pays on time, you are very likely going
to find creditors coming out of the wood work and hunting you down to offer you a line of credit, but consider
their offers with caution. Actually, the best recommendation is to give your self at least 6 months to a year
before taking on a new account. Jumping in too fast can easily wipe out all of the hard work you have done so far
to establish some credit.
Once you jump on the credit bandwagon, it is vital that you keep track of your own credit rating. You will find
many great offers online for programs that can inform you, on a regular basis, of your credit standings. You could
also request your free annual credit report and verify your status regularly.
Once your credit becomes active, keeping track of your credit report is crucial for many reasons:
1. It could prevent the use of a fraudulent credit account by an unknown user.
2. It could prevent the unfortunate event of somebody stealing your identity and using your credit.
3. It could help find a lost payment and assist you with keeping track of how your creditor is reporting your
4. It is just good credit etiquette to know your own credit rating.
5. Knowing your own credit rating and status gives you bartering power when dealing with a new potential
Once you’ve established some credit, take caution with accepting credit offers from other creditors, look into the
interest rate the lenders are offering, consider the monthly obligation in addition to your other financial
responsibilities such as rent, utility bills, car insurance, groceries, laundry expenses, gas, day care, etc., and
feel free to decline credit offers.
In the beginning of your adventure with new credit accounts, it can be very exciting to have several creditors
offering advances, it can be an uplifting and powerful event, however, pursue with caution in order to maintain a
healthy credit rating and score. Keep your credit history in mind and respect the great task that you have
accomplished by establishing credit with caution.
Here is a list of credit cards you can get approved for instantly without
any prior credit history and will get you on the road to establishing a rock solid credit rating.