Just starting out & NO CREDIT? Try this.

Here are some helpful hints as you begin, what will hopefully be, a strong credit history. Using credit wisely will help you secure future loans and mortgages. However, being careless with credit or not paying attention to your debt load can lead you into trouble.

Obtain Your Credit Report (https://www.annualcreditreport.com/) You are entitled to a free credit report each year from each of the three reporting agencies. However, your credit score is not free and is not included in your credit report. You’ll need to purchase your score.

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Your credit score is a three-digit number, ranging from the low 300s to the highest, 850, that rates your financial history.

If you have no credit score, you might need to obtain your first credit card from your bank or credit union. If your financial institution is reluctant to issue you a credit card because you don’t have any credit history so far, ask them about a secured credit card. With a secured credit card, you deposit money ‘on account’ and keep it in a savings account that you can’t access for the amount of the credit limit on your card.
You also could put bills, accounts, or small loans in your name to establish a history.
If you have a poor credit score, again look for secured credit cards. These are similar to debit cards, allowing you to provide the line of credit through your own savings.
For those with good credit scores, find a credit card that matches your needs and lifestyle.

The Great Credit Card Search

Compare credit cards online by your credit score, the type of card and rewards, and details such as interest rates and annual fees. An excellent source of information is http://www.creditcardconnection.org/. Here you’ll find a list of fair and ethical credit card companies.

Things to Consider

Will you pay off the balance in full every month? If so, the interest rate a credit card charges on balances might not be as important to you as possible rewards the card offers.
What kind of rewards are most important to your lifestyle? Cash back, free airline miles, grocery store rewards, or gas money? Consider credit cards that provide extras for the things you pay for the most.
Is there an annual fee?
Will the rewards outweigh the annual fee of the card?

Read the Fine Print

The APR is Annual Percentage Rate and is the amount of interest that you are charged on balances. The lower the rate, the less interest you pay.
Annual Fees: Make sure you know what the amount of the annual fee, if any, is before you apply for the card. Often credit card companies will waive the fee for the first year.
Credit limit: This is the credit card company’s calculation of how much you can borrow. Find out what the fee is if you go over your credit limit.
Finance Charge: The total cost of borrowing, including interest and fees, expressed in a dollar amount.
Minimum Payment: The least amount you’re required to pay each billing cycle. Remember, if you’re only paying the minimum amount each month, it will take a long time to pay off the balance.

Using Your Card Smartly

Credit cards allow you to make purchases on credit, up to your limit, and pay off those purchases in a timely fashion.

If you pay your balance in full every month this will help you will build good credit.
If you pay only the minimum payment each billing cycle, the credit card company will charge you an interest on the remaining amount, which causes you to pay more in the long run.
Always pay the minimum payment on time. It’s best to pay more than the minimum each month. But if that is not doable, at least pay the minimum. This will prevent you from looking bad to creditors and other reviewers of your financial information.

Pay close attention to your credit card statement every month. Watch for increases in your APR or decreases in your credit limit. Also watch for items that do not look familiar. If you question a charge, speak with your credit card company.

Centra Credit Union is always available to answer questions you may have about mortgages and other types of loans and credit cards.