Getting a loan for the first time is not always easy. Most creditors want you to have credit before they give you credit, which makes it difficult to get started. When you get a loan for the first time, it will be a little easier next time.
Where to apply for a loan
The best way for a beginner to get credit is to apply for a credit card for people who are new to credit. If you already have a checking or savings account, make sure your bank has a loan product aimed at someone with a limited credit history.
The bank may offer a student or secured credit card or credit facility. If you cannot start a loan with your own bank, there are other options.
It is often easier to get a credit or gas card. Once you have established a few months of credit history with a retail or gas credit card, you are helping to qualify for a major credit card, such as Visa or Mastercard.
While retail and gas cards are easier to get, they also have higher costs. For example, the interest rate, which is essentially the cost of carrying a credit card balance from month to month, is higher for oil company department stores and credit cards. On the bright side, a positive history with one of these cards helps you later qualify for a major credit card. And if you pay your full amount every month (which you need), you will not pay any financial expenses.
You can also sign up for a secured credit card
This is a type of credit card, which requires you to make a deposit to receive a credit limit on your credit card. Some secured credit cards will be converted to non-secured cards after 12 to 18 months of positive credit history.
How old should you be?
Typically, a person must be 18 to get a credit card or credit.
Teens under the age of 18 can be added as authorized or shared credit card users. Major credit cards, such as Visa and Mastercard, typically do not provide credit to underage applicants.
To obtain a credit card under 21, you will need to provide proof of your income or have mutual assistance with you with a shared credit card.
What to watch for
Don’t be so anxious to start with a loan that you make a mistake that hurts your chances of getting approved. Here are some things to keep in mind when applying for a loan for the first time.
Avoid making several loan requests . Every time you apply for a loan, a query is added to your credit report. Too many questions in a short period of time can make you look like you are desperate for credit. Credit card issuers will be less willing to give you a credit card.
Be wary of credit card deals that guarantee approval regardless of credit history . Offers like this are usually credit card frauds that end up costing a lot more than you spend.
When you get a credit card, it will be important for you to use it wisely . This means filling up a balance that you can afford to pay off and make your monthly payments on time.
Limit the number of credit cards you start with .
Taking too many credit cards at once puts you at risk of creating more debt than you can afford to repay. Getting started with just one credit card is typically best.