How to Establish Credit
Young people recently out of school frequently have difficulty borrowing or buying on credit because they have no credit history. To establish your “credit,” you must prove that you are willing and able to handle your financial obligations.
You might, for example, open a charge account in a department store or apply for a gasoline company credit card. Prompt payment of the bills on these kinds of accounts will help establish a good credit rating.
| A co-signer is a person with an acceptable credit rating who agrees to repay a loan if the borrower cannot. |
If you have a savings account, you may already be eligible to apply for a passbook loan against your balance in that account. Here again, prompt repayment will add to your credit rating. It is possible to borrow before you have established a credit rating, but you must find a I co-signer. A co-signer is a person with an acceptable credit rating who guarantees to repay the [. loan if you cannot. The point is that a good credit rating is a valuable financial tool. While it I may take some time to acquire and maintain, it will increase your financial options.
Still, while credit increases options, one should never rely on it too heavily, especially for emergencies. There are better ways of planning for emergencies in your budget , and one of the most effective ways for consumers in insurance.