How to Get Credit in a Bad Economy

If you’ve been impacted by a bad economy or never took the opportunity to establish your credit when it was easy to do, doing so now will be a bit trickier, but doing so now is actually to your benefit.

No Credit and Bad Credit

When someone overextends himself and ends up with blights on his credit, he has earned himself “bad credit.” The definition of bad credit changes with the moods of the banks, and right now anything less than perfect might be defined as bad credit. But someone who has never opened a credit card or applied for a car loan doesn’t have bad credit. That person is untried – he has no credit.

Check for Mistakes

If you know that you should have no credit available, your first stop is to be sure your credit is still fresh and clean. Even without a credit card of your own, you might have been the victim of identify theft meaning someone used your information to open credit cards for illegal use. To check this, you can simply use your free credit reports. The three major credit bureaus should have nothing on file for you other than an address. If this is not the case, immediately contact all three bureaus to dispute the records and contact the police as well if your identity has been used for illegal purposes.

Open a Bank Account

Your first step to establishing credit is to open a bank account if you don’t already have one. Your ideal account is a checking account complete with a debit card that can be used as a credit card. Fill up the account with as much cash as you have available to give yourself a solid backing should the question come up. The account should be a single account, not a joint one or a sub account on your parent’s larger one.

Apply for a Credit Card

Before you head for a car dealership, test your credit by applying for a credit card. You can apply for an introductory Visa or MasterCard or go the easier option of applying for a store card at a retail establishment you frequent. Use the card wisely right from the start by buying no more than you can afford to pay in cash.

Apply for a Secured Loan

Once your credit is established using a small credit card, your next step will be to apply for a secured loan. A secured loan is typically a car or home loan – the loan is backed by the large item you’re purchasing. A car loan is by far the less complicated of the two. Always push for the best deal in financing terms and so long as you’ve been using your credit card wisely, you should qualify with no problems if you’re staying within a reasonable budget.

Easy Step By Step

• Check for mistakes on your credit report or identity theft
• Open a bank account along with a debit card.
• Apply for a simple credit card.
• Apply for a secured loan.

Warnings, Advice, and Suggestions

You have the opportunity to use credit wisely. Never charge more than you can pay in cash and always pay your bills on time.

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