Getting Credit when you have none…

This topic has been on my mind for sometime now, but got brought to the surface on a recent visit with a client. The question came up “How do I get credit, when I have none?” A person can go into the bank and a bank will decline them for credit, because they have none, or a car dealership will decline a person for an  low interest auto loan, because they have no credit. This leaves the person in a corner because they are trying to get credit, to establish a positive payment history. If a person is trying to establish some credit on their own I would suggest getting a secured credit card. In an earlier post I talked about the Home Trust Secured Credit Card. This is the card I would suggest. Another option would be to get a car loan at a higher rate and pay it off early as this will let future lenders know that you are serious about building credit and have the means to do so. These would be some options for the client by themselves. This would create an established history on their own bureau. Another option that is good is to bring in a co-signor on an auto loan. This would allow a person to maybe get approved at a lower rate, and also build their credit. I do have to advise that as a co-signor this will report to both credit bureaus the same, as far as payment goes. This difference between an Individual loan and a co signed loan is the co-signed loan will show up as a J(Joint) and single loan will be a I(Individual). The payment will report to both bureau the same. It could always be an option for a co-signor to be released from a loan down the line but one of the applicants would need to qualify for a loan, for an amount to pay off the remaining. This is a good option to build credit as well. Another option is “piggybacking” We will get into that topic on a later post.

Just my 2 Cents

-M

Mark

Mark

Financetoday.cawww.financetoday.ca