live, and a sense of stability is fine as you get older, but applying for credit for the first time could be difficult. If you can’t get credit, try a secured credit card. Typically you have to open a bank account with the creditor, say with a $500 deposit, then that becomes your spending limit. Make sure the lender notifies the credit reporting bureaus about your account status. Check out www.bankrate.com for the latest rates on secured cards.
9. Assuming your credit report is accurate. “Not only does the consumer have to put accurate information on [an application for credit], you have to make sure the credit granter inputs that information and that everything is written clearly,” says Junkas. Therefore, “keep all documents–your check, receipts [or any proof of payment for items under contract],” adds Brenda J. Freeman, educational specialist of community affairs for Consumer Credit Counseling Service, a division of Money Management International (www.cccsintl.org; 800-873-2227). Watch out for incorrect balances and paid-off or closed accounts reported as open. If errors still appear, “you have the right to add a 100-word statement to your credit report,” she says. (To fix mistakes on your credit report, see “Creeping Credit Errors,” September 2001.)
10. Naming your children after you, as with father/son names (i.e., Sr. or Jr. or I, II, or III). You have to make sure that the information for either of you is not intermingled. If it is, contact the credit reporting agencies immediately. Arm yourself with documentation to prove who you are. Be mindful that this can also happen when someone in your family tries to use your credit because theirs is in arrears.
What’s the bottom line? Take care of your credit and it will take care of you. “Treat your credit like it’s your first-born child. It’s the most important investment you can make,” says Warren. “Credit affects the quality of your life. Understand the responsibility that you’re getting into when you do get it. It’s not free money.”
Conquering Credit Myths
Credit reports are available only to creditors. That’s untrue. You can get a copy of your credit report for a fee (or free depending on your state) by writing the three credit bureaus. You can also obtain one for free if you are unemployed, a victim of fraud, or have been denied credit on the basis of your eport.
- Late payments don’t show up on your credit report. Not so. Any time your payment is more than 30 days late, your creditor can report the delinquency to a credit bureau. Late payments can impact your ability to get a favorable interest rate or future credit.
- You can pay less than the minimum payment without penalty. Unfortunately not. You must send in the minimum amount required by the due date or the creditor may consider your payment late and charge additional fees. The creditor may also report it to a credit bureau.
- You’re only liable for debts on cosigned or joint accounts that are related to your purchases. This is incorrect. You’re financially