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How To Establish A Good Credit Score And Get Loans

By Tamala Parsons-Wilkes

When you hear the word credit you think of charge cards but there are many other types of lending. The definition is where a lender gives a borrower money in advance to pay for something, and the borrower does not have to pay the lender back right away. They get a preset period of time to repay. Good credit history has an impact on many aspects of ones life. Obtaining some jobs, getting a mortgage, leasing or buying a car or getting an apartment can all be dependent on it.

Short term credit is another type, and is usually based on a one time purchase which the borrower pays back over a small period of time. There is usually a small amount of interest although if you are late in paying, you may be charged a late fee. Long term is similar only the terms are over many months and years. Your payment is set at a fixed amount where you have to pay it back over a preset period of time and interest charges are often higher.

Secured credit requires collateral, or something of value, promised to the lender to guarantee payback. Mortgages and car loans are examples of secured. Unsecured means you do not have to put up any collateral. Nothing is asked for by the lender and they are lending to you based on pure trust. Charge cards are a prime example of unsecured.

Sometimes getting loans can be hard if you are just starting out and really do not have any history to go on. There are little ways to start building up a history so that when you want to apply for some bigger loans, you will get approved. Basically the better your credit history is, the more likely you will be able to borrow later on.

One way to help start establishing your good money management history is by opening up a checking or savings account. This is the easiest and simplest way and while it does not show on your history, it still shows potential lenders you are responsible. Once you have opened your checking or savings account this is your big opportunity to show your trustworthy so do not overdraw or bounce checks.

If you are a renter, you already have some proof of worthiness when borrowing. Utility bills are sometimes considered a form of credit so showing that you can pay your bills on time makes a good impression. Also your landlord can be a reference when you pay your rent on time.

It would not hurt to apply for gas or department store cards. They are easy to get and will give you about five hundred to one thousand dollars to spend. Make your monthly minimum payment on time each and every month or pay the balance entirely. If not, then the company will charge interest on the total amount charged for that month.

If you think about it, with the exception of secured credit, a lending company is taking a big chance on you by immediately giving you money to use without anything of value in return in case you do not pay them back. New opportunities may come along that require a credit check so it is recommended you maintain excellent credit. Stick to the terms of your loans without fail.

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categories: personal finance, credit cards, loans, credit score, ppi claims

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Article Citation
MLA Style Citation:
Parsons-Wilkes, Tamala "How To Establish A Good Credit Score And Get Loans." How To Establish A Good Credit Score And Get Loans. 21 Jun. 2010. 26 Oct 2014 <>.

APA Style Citation:
Parsons-Wilkes, T (2010, June 21). How To Establish A Good Credit Score And Get Loans. Retrieved October 26, 2014, from

Chicago Style Citation:
Parsons-Wilkes, Tamala "How To Establish A Good Credit Score And Get Loans"

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