Saturday, December 13, 2008

Saving Money & Building Credit: Two Things You MUST Do in Your Financial Life

If you’ve just graduated this twelvemonth and are out on your ain for the first time, congratulations. If you’re not headed back to grade school, report cards and classes are behind you...but only screen of. Once you’re out of school, you’ll be ‘graded’ for the remainder of your life—but this clip the bet can be much higher. How much money you have got in the bank (and other investments) and how high your credit score is can determine which financial chances (like owning a house or purchasing a car) you’ll be able to do. Fail on these two counts and you’ll end up inch the company of most people who have got no savings, no home ownership, no luxuries, and no retirement to number on.

But you’re in a terrific topographic point right now for making all the best things happen: salvage money so you can afford the house or car, the luxuries, and the retirement you want...and encouragement your credit score as high as possible so you can get great rates on that house or car, get the occupation you desire (yes, many employers look at credit scores to see how responsible you are), and be able to take advantage of tons of financial chances down the road.

Because these two things are of import to your financial health, and because it would be impossible to touch on every important point you need to cognize about in one article, you’ll be hearing about them often in your monthly Doses of Reality. In this issue, we’ll focusing on your credit score.

So for starters, you need to cognize where you stand up credit-wise. You need a transcript of your credit report and score so you can get an thought of what you’ll need to make to increase your score as high and as quickly as possible. Scores don’t change very quickly, so now is the clip to happen out where you’re starting from and get working on improvements so you’ll be ready when you desire to purchase a car, a home, or even get or change occupations to one that mightiness take a peep at your score to see ‘what sort of individual you are.’ Start with a credit reporting site—it’s best to get reports from all three major credit reporting agencies because when a possible lender looks at your credit, they look at all three (the scores will be different for each, since their criteria are different for determining scores), and they’ll come up up with some type of concerted or average score to determine which interest rate they’ll offer you for your car or home purchase—the better the score, the lower the interest rate you can get. [see the nexus at the end of this article for the fastest path to a good credit reporting site]

A great manner to get started if you have got no credit history yet is a prepaid credit card. With these, you set the money up and then travel shopping. You might set $250 in your account, usage the card for groceries, and ante up another $250 (or whatever amount you choose) when you’re about to run out. These are perfect for people with no or very bad credit—you’re guaranteed to get the card and can begin edifice a credit history immediately. Then, after a couple old age of handling that card responsibly, you should measure up for a ‘real’ credit card.

If you have got only a small credit history built up (maybe from using one of those prepaid cards), your best topographic point to travel adjacent is to get a credit card with a low credit limit, and preferably no annual fee. Use it for lone a few purchases each calendar month and pay it off when the statement come ups in the mail. Lenders will be looking at your credit report for the length of clip you’ve had a credit card as well as whether you pay on time.

If you maintain your balance each calendar month well below your limit, that’s good, too, because lenders don’t desire to see you maxed out. The Discover card is a good 1 to begin with...their student card have no annual fee and you get that discount at the end of the twelvemonth that they’re celebrated for. If you can’t measure up as a student any more, store around and happen a card that volition work for you—keeping in head that if you’re going to pay it off every calendar month (and you definitely should!), the annual fee is more than than of import than the interest rate. Go for a card with no fee, wage it every month, and that credit will cost you nil at all, but will hike your score every calendar calendar month you manage it responsibly!

To happen golf course for these credit cards, credit reports, and other financial helps, see

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