Guide on establishing credit and creditworthiness with banks.

Tips and help to establish credit and creditworthiness.

An Online Free Christian Magzine on money issues

Money Management Part 11

Establishing Credit and Creditworthiness

Credit, creditworthiness and the almighty credit card have all been so ingrained in our way of life today that without them you feel like a non-entity, or maybe suspect in your dealings with everyone. You become very noticeable if you pay cash for any purchase that having a credit card nowadays is second only in importance to having a driver’s license. When you have both you are complete.

Establishing Creditworthiness

But how do you establish credit and creditworthiness?

The first obvious thing to have is money. Not so much, but enough to tide you over, through the times when credit is unavailable. With part of that money, open a checking and/or savings account at the local bank, whichever is easier. Better if both.

Use the checking account with utmost discretion. Remember that you must never overdraw on your account; else, your credit rating will plummet and creditworthiness will be more difficult to achieve.

Then you can apply for a debit card at the bank. A debit card works like a checking account, except that your purchases are instantaneously deducted from your account. Be ready with your assets and liabilities statements when you apply for the debit card, as it may be necessary to establish your liquidity or capability to pay for your purchases.

Once you are granted the debit card, be wise in using it. Keeping a record of all purchases via the debit card will enable you to keep track of the money remaining in your account.
You are in a probationary period, so be conscious of what, where and how much you buy on the account.

Spending Patterns

Avoid both extremes of spending, as either is not good for creditworthiness purposes. Buying expensive and luxurious items often will establish you as a profligate client, in danger of not paying for your purchases. On the other hand, hardly buying anything will make you look like a miser, from whom the bank will not earn anything in terms of interests charged. So better use the debit card like cash, and charge all your regular needs to it. But never forget to regularly replenish the account from your earnings. Again, bear in mind that you must never fail to pay for your purchases.

After enough time has passed, apply for a charge account at the local store and charge your purchases there. They will make inquiries about your creditworthiness so if you made good your credit line at the bank, the store will probably give you the account.

Only after you have established your creditworthiness would you be able to apply for a credit card. Depending on the requirements and the elapsed time, you might be rejected by a company, but accepted at another, so keep trying if you really need a credit card.

Card Offers

When credit card companies offer you their cards, then you know your creditworthiness has been established, and your credit standing is good.

Congratulations!

Money Management Part 11

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