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NO CREDIT

No credit is both more and less difficult to deal with. It's less difficult in that you don't have the past problems hanging over your shoulder waiting to cause loans to be denied. It's more difficult -- if you don't know how to go about establishing credit -- because no credit becomes a "Catch 22" with most banks. Anyone who has applied for their first VISA or MASTERCARD without an established banking relationship knows just how hard it can be.

Step by Step Solution to establishing credit

Remember to bookmark this page so you can come back for each step and plenty of new information on the best credit deals, homeownership and home loans.

Step One -- establish a banking relationship. Open a checking AND savings account if you don't already have them.

Step Two -- get a VISA or MASTERCARD. You can do this by following this link and applying for the FUTURE CARD. If you have absolutely no credit, you will have to apply for the SECURED card, which means opening a savings account that will act as collateral for your credit.

Step Three -- use your new card carefully for a few months. Generally, to establish an "active" trade line you will need to carry a small balance on your first account for 6 months, making at least the minimum payments on time each month. If you pay the card off in full each month, you may not generate as positive a line as if you carry a small balance ($100 or 200 should be plenty) and pay on time each month.

Step Four -- establish two or three other accounts, such as department store cards. Some departments stores will automatically open an account for you if you have a VISA or MASTERCARD in good standing. Some of these may not even require the 6 month wait. Again, you will need to use these accounts, wisely of course, and carry a small balance with on time payments for about 6 months to establish credit.

Step Five -- Get an unsecured VISA or MASTERCARD by following this link. Use it and continue to carry the small balance on your secured card for now. After about a year to a year and half of having the secured card and some department store type accounts and six months to a year with the unsecured card, you should be ready for

Step Six -- You should have enough credit established to apply for a home loan and buy a home!

Step Seven -- Now is the time to pay off and get rid of the secured credit card and pay down your outstanding balances on those other cards. Resist the temptation to overspend on your new credit, especially when you start to get the multiple credit card offers that come to all new homeowners. Talk to a financial planner about drawing a budget and investing some of each paycheck. Use your new credit wisely and in a short time you'll be ready, if you desire, to join the ranks of real estate investors.

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Iola J. French, Broker Tom Hanna, Missouri Licensed Real Estate Agent
Address PO Box 166, Granby, MO 64844
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Page created by and © 1996-2008 Tom Hanna
Sunday, March 2, 2008