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Establishing or Repairing Your Credit
- How do I best establish credit?
- How can I find out what my credit score is?
- I need to establish (or re-establish) credit, but all
the credit cards available to me have really high fees or require a
big deposit. How can I get started?
- I was turned down for a merchant account because I claimed
bankruptcy and haven't re-established credit. What can I do?
- How can I keep my credit clean?
- How can I monitor my credit score? Is this important?
1) How do I best establish credit?
It can be challenging to initially establish credit, but there are
several ways you can do this. Initially, establish a checking account
and build credibility with it. Do not overdraw your checking account,
as lenders tend to look at your banking history to determine how responsible
you are.
Probably the easiest way is to apply for a credit card from a gas
station or local department store. Department stores are lenient with
their credit, but take note that their rates are usually quite high. Don't
use the card much, and pay it off right away! This is an effecient way
to establish credit.
Another way is to apply for a small loan or line of credit from your
local bank. In some cases, you may need a co-signer. Confirm that they
report to a credit bureau. Make prompt payments.
You should also have one major card, but initially you will need to
get one that especially caters to those who need to establish or re-establish
credit. Be careful with these, as some are quite expensive. I recommend
this
one since they are quite prompt in reporting your good payment status,
and reasonable in price. Use your credit minimally and pay promptly, and
you'll quicky build a good credit record.
2) How can I find out what my credit score is?
If you are turned down for credit, by law you are entitled to a free
copy of your credit report. Or, there are online services that will allow
you to see your credit report. One good one is Equifax.
(more about these services)
3) I need to establish (or re-establish) credit, but
all the credit cards available to me have really high fees or require
a big deposit. How can I get started?
There are credit card companies out there that are very helpful in
establishing credit, and unfortunately, others that prey upon the unwary
with huge hidden fees. I recommend this
MasterCard as the first step to establishing or re-establishing your credit.
They are very reasonable and they will report the positive addition to
your credit report quickly. This company is refreshing in that its fees
are stated upfront and they are prompt in reporting your positive credit.
Get their credit card, use it minimally, and pay on time,and you'll
quickly see some positive reporting on your credit report. This will be
invaluable in establishing (or reestablishing) your credit in the future.
And you'll want to sign up for a credit onitoring service to monitor everything
about your credit score.
4) I was turned down for a merchant account because
I claimed bankruptcy and haven't re-established credit. What can I do?
You'll need to re-establish credit for 3-6 months before applying
for a merchant account. To do this, obtain a credit card and make timely
payments for a few months. Not all credit cards are equal however! These
types of credit cards do have a yearly fee, and some credit cards charge
huge hidden fees for people in this situation.
I recommend this
MasterCard as the first step to establishing or re-establishing your credit.
They are very reasonable and they will report the positive addition to
your credit report quickly. Get their credit card, use it minimally, and
pay on time, and you'll almost certainly be accepted when you re-apply
for your merchant account. While you wait, you can start selling using
Paypal. (see more information on merchant accounts
and setting up e-commerce)
5) How can I keep my credit clean?
Once you've established credit, be sure to sign up for a credit monitoring
service. I recommend Equifax
Score Watch. 
Secondly, be conservative with your use of credit. Never use more
than 50 - 70% of your available credit on each account,, and be sure to
make payments on time. This requires paying strict attention to due dates.
Credit card companies have become so unregulated that you should be
very careful using them. Even one late payment can cause your interest
rates to skyrocket, and even affect your other credit card interest rates!
Hopefully banks will be eventually regulated as to how they can charge
interest, but until then caveat emptor (let the buyer beware!). They should
be considered a necessary evil, used minimally in order to build credit
so that you can qualify for important purchases, such as home loans.
6) How can I monitor my credit score? Is this important?
There are many services that will allow you to monitor one or all
three credit reporting firms, and to view your credit report(s) online
or via postal mail. I recommend Equifax,
because you get access to all three credit reporting firms, and it is
relatively easy to dispute inaccurate reporting. Plus you get alerts when
a change has been made to your account.
Yes, monitoring your credit score is important. You will be alerted
whenever a new report is added, which allows you to check its accuracy
right away. This also allows you to stop any potential identity theft
immediately - an invaluable service! Monitoring your credit is vital in
the 21st, not only to improve your credit score, but for your own security.
Get
Equifax Credit Watch Gold 3-in-1 Now! 
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