20 December 2014

How I built my credit score

Just to point it out, I never owned any credit cards, any types of loans, or signed up for any bills. I used to pay everything with cash or debit card (by everything, I mean E-V-E-R-Y-T-H-I-N-G! From groceries to my school tuition that I paid under my parents' name,  long story.) I was always the type of person afraid of the IRS coming after me & pretty much the entire C.I.A. looking for me, haha. Can you call me paranoid? Nah, maybe just being "too safe."

Fast forward, I have come to the conclusion that I want to open up a brick-and-mortar boutique shop within the next 2-3 years. After researching how to save at least $20k, I realized that was not going to happen anytime soon so another option was to get a loan. Thing is the lender will look at your credit score, etc. the entire 9 yards.

So that's basically the story behind the reason why I started focusing on building my credit. This post are for those who has NO CREDIT SCORE whatsoever. I'll lay it out the same way my lazy mind would understand it, step-by-step.

  1.  No credit? No problem. Got a checking & savings account from your bank? Perfect! If not? Sign up for one. 
  2. Ask a bank teller from your bank if they offer secured credit card. If so, ask if you could sign up for one. (Not all banks offer them.)
    • Secured Credit Card: A type of credit card that is backed by a savings account used as collateral on the credit available with the card. Money is deposited and held in the account backing the card.
  3. The credit limit will depend on how much you deposit to your account. But again, it varies ranging from $300-$500. (Refer to the definition above)
  4. Use only half of your limit & pay it off at least 2 weeks prior to due date (apparently a lot of lenders like that haha.)
  5. Repeat step 4 every month & you can start building credit in no time. Please spend & pay wisely.  Always Budget & Manage! 
For extra information such as credit limit & annual free, this is the link I referred to prior to talking with a bank teller : 10 Questions about getting a secured credit card

I slowly began building my credit & within 6 months, I got me 806 :)! It could be different for everyone & it really depends how your lifestyle is like (pst! if you're a total shopper like me, or just a wild spender haha.) The secure credit card I signed up for comes with an iPhone App & Free FICO score. After I figured out how to work the App & finding out about the FICO score (which you will have to wait at least 2 months or your second statement to view it), I decided to apply for a Discover card.

*TIP: Discover card has no annual fee!

As of today, six months since I started building my credit, I finally feel like somewhat of an adult? We'll see how that goes in another six months. :)



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