Do you know how to establish your credit?
Establish Credit
Credit. It’s hard to live without it. Do you need to rent a car? You’ll need a credit card. Some gas stations only take credit cards. WalMart has checkout lines for credit cards only. Do you want to buy a house? If you’re not paying cash, you’ll need a mortgage. And you won’t get a mortgage without, you guessed it, credit.
If you’re older, you probably have some credit history. Hopefully, it’s a good one. However, what if you’re young, maybe you recently turned 18? Or maybe a child just turned 18?
Get Started on your Credit
Let me share with you something that we did to get our children started on the right foot. When they turned 18, we went to our local bank. We sat down with the banker and explained what we wanted to do. We gave the banker $1,000 to purchase a 12 Certificate of Deposit (CD). This CD paid us a little interest, not really enough to get excited about, but that wasn’t the goal. We then asked for a $1,000 personal loan in the child’s name only. The banker asked if the child had any credit established, we said no. However, we would be willing to give the bank the $1,000 CD as collateral, thus guaranteeing the loan. We had to pay a little more interest for the loan than we earned on the CD. However, the goal was to get a loan and begin establishing a credit history. At the end of 12 months, there was a steady history of making the loan payments on time.
Bottom Line
This is a great way to get either yourself, or a child, started on establishing credit in their own name.
So now that you’ve gotten an idea on how to establish your credit, when you’re ready to either buy or sell a home, please contact us. We’ve helped hundreds of our clients achieve their real estate goals, and we would like to help you too.
Would you rather search for an active adult community home in Monmouth County?
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