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OBTAINING CREDIT
Department stores are good sources for credit.
You can put clothes or another item on a layaway plan, and pay for it in regular payments over time. Before you proceed with this, go to the store manager and let him/her know what you are doing and why. Pay for this in 6 to 12 months, then go back to the store manager and ask for an application for a store credit card. They will check back on your layaway plan payment history, and should then be willing to open a charge account in your name.
Another way to establish credit is with a bank "secured" charge card (MasterCard or Visa). By calling around to your local banking institutions, you will find a legitimate bank offering this
type of service within your local area or you will be advised of one.
It works by depositing a minimum amount, usually $300, into the bank. This will cover them against any risk that you will default on
making any payments.
Your line of credit is normally established between 70% to 100% of your deposit, depending on the banks policies and any past credit history. They will require that you keep that amount deposited for 1 to 2 years. Once you have shown that you pay your charges in a timely manner each month for that period of time, the bank will allow you to withdraw your funds and still maintain the card, but now unsecured.
Remember to ask many questions before you apply for a secured card. Some of those questions we recommend are:
Is there a processing fee required to apply for the card?
Is the account reported to the credit bureaus?
How is the card reported?
Secured or as a standard Unsecured card?
What is the annual percentage rate?
Is there annual fee for the card?
Is it a general purpose MasterCard or Visa?
How long will I have to maintain my deposit?
Secured cards are a good deal for banks, because they will be earning money on your deposit, as well as the
credit card itself. A secured bank card will help you establish credit, but it will not cure any past credit problems.
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