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Establishing or Re-establishing Credit
 
Credit is a tremendous asset. When maintained properly, it can help provide a great deal of financial freedom.

If you're trying to establish or re-establish credit, there are a few steps to getting started. First, open a checking and/or savings account. Creditors look at them as evidence that you are able to handle money.

Next, open a charge account at a local department store or apply for a gasoline credit card. These are often stepping stones to other forms of credit. Be sure to make regular monthly payments on time to establish a good credit rating.

When trying to establish credit, you may want to consider taking out a small loan from your bank or credit union. Deposit the money you borrowed into a savings account. While you pay off the loan, the interest you are earning on the deposit will help cut the cost of the loan.

Secured credit cards are also available. With a secured card, you deposit a specified amount of money in a financial institution which then issues you a bank credit card (Visa or Mastercard). The amount you deposit becomes your credit limit. With timely payments, your credit limit may increase and eventually the account may no longer need to be secured by your savings.

Establishing credit is only one step. Credit is not free, so use it wisely. One question you should ask yourself is "How much credit can I afford?". A good rule of thumb is to owe no more than 20% of your net income for consumer debt, excluding mortgage or rent. Yes, this does include your car payment.

Remember, credit isn't a right, it is a privilege that you should protect. The key to establishing a good credit rating is to use the credit you have responsibly and make all payments on time.

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CCCS, A Division of Money Management International
Regional Headquarters - 7000 Peters Creek Rd., Roanoke, Virginia
Corporate Address - 9009 West Loop South, Seventh Floor, Houston, TX 77096
It’s time you discovered financial freedom through Consumer Credit Counseling Services. Call 1-866-260-5994 or start counseling online today.