Starting with Nothing (forbes)

 

While the debate continues in Washington over how tosettle the debt ceiling, the U.S. risks losing its much coveted AAA rating from both Standard & Poor’s and Moody’s. This high rating has enabled the U.S. to borrow funds at a low rate, as their bonds are backed by the full faith and credit of the U.S. government.This is also why the dollar grew to become the world’s number one reserve currency. However, this week, America’s risk to investors surged to its highest level since 2009 according to theCredit Default Swap, an instrument used to gauge such risks. The effect of this surge will have investors thinking twice about investing in U.S. interests, and if the trend continues we could lose our AAA rating.

Many don’t concern themselves much with the global economic picture – even that of their own country – because often it is too convoluted to follow, and just seems better left to those who know. Of course when it comes to our own credit and finances, we don’t have the benefit of financial experts sitting around a table for hours on end telling us the best direction to take. When we lose our credit rating it can seem impossible to find banks offering credit cards for people with no credit. It is the old catch-22.Very few companies now offer credit cards for people with no credit.Banks can be like nervous beach swimmers when no one wants to be the first to test the waters. However, there are ways to improve your credit.

First, make sure your banking is in order. You don’t need credit to open a bank account, and while having a checking or savings account will not establish credit, it is something lenders will most likely take into consideration when deciding to extend you a line. Your employment history will also be taken into consideration.Lenders like stability and steady employment – preferably with the same employer – speaks well of your fidelity. The same holds true for residency, as those who jump around tend to make lenders nervous.Try to have all utilities in your name, and longevity paying these bills will present you as having a stable character.

Another great way get a credit card, with no credit, is to start at the local level. Department stores typically offer their own card to customers. These can be a wonderful way to build credit. Once the card is activated and you have begun making payments, the credit bureaus should pick up this information. As there are some department store cards that don’t report to the credit bureaus, try to find out if yours does;if not, their card will not be of any worth in establishing credit. Be wary of department store credit cards that lure you in with a low interest rate, as they oftentimes grow to a higher rate fairly quickly.

There are always secured credit cards if all else fail. These cards are linked to money you deposit.Should you miss a payment; the bank can simply withdraw the money owed. Typically,secured credit cards will not assist in establishing credit;however, there are a few that will affect your credit limit, so check with your bank. Once you have established credit and have your first non-secured credit card, you can enjoy the convenience of charging. Just don’t follow the government’s economic lead, as you don’t want to end up in over your debt ceiling and lose your good rating.