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Building Credit

Many people prefer to manage their personal finances entirely with cash, but having credit is essential for buying big ticket items like cars and houses. If you are young and just starting our, a recent immigrant to this country, or have lost the wage earning spouse in your family, then you need to build your own credit history before you will be approved for large purchases.

Building your credit takes time but can be done easily by following a series of steps:

  • Open checking and savings accounts at your local bank. Every creditor wants to see that you have an establish banking relationship even though savings accounts are largely irrelevant.
  • Get a debit card tied to your checking account. Debit cards look and work like credit cards except that they directly draw from your funds on deposit just like checks.
  • Get a store credit card. Stores are more likely to issue cards to people with little or no credit history if it will help them make a sale.
  • Have the bank at which you have your checking

    and savings accounts issue you a credit card with a low limit.
  • Develop a history of using and paying regularly on the card to demonstrate your credit worthiness; after a year, ask them to increase your credit limit.

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