Credit: How to Get It, Build It, and Use It!

When Jorge Rojas applied for a cell phone, he hoped that the contract provider wouldn't check his credit history—not because it was bad, but because it didn't exist!  Like many people, Jorge paid for most purchases with cash and did not have a formal credit history. 

These days, it's not just banks that are interested in your credit—landlords, insurance companies, cell phone providers, and even employers want proof that you can handle credit responsibly.  However, if you've never borrowed money from a bank or used a credit card, you do not have an established credit history, and this can make getting a loan extremely difficult.   Establishing a personal credit history is essential to long-term financial success, especially if you're interested in starting a small business. 

It takes time to establish credit and build a record of timely repayments, so start building your credit today!  Diana Dezso, credit expert at ACCION, a small business lender, offers the following tips to establish credit for the first time:

• Apply for an ACCION loan.  ACCION provides small loans that help individuals without a credit history begin to build their credit.  With a loan for as little as $500, you can begin to demonstrate your credit-worthiness, and borrow larger amounts in the future! Attend a workshop or contact ACCION at (212) 387-0494 for more information. 

• Apply for a secured loan or secured credit card.   These loans and credit cards are guaranteed by your money, but still help you build credit!  When you get the loan or credit card, it's essential to make the payments in full and on time.

• Get a cosigner.  Asking a friend or relative who has good credit to cosign, or share the responsibility for, a loan will make it easier for banks to lend you funds.

Patience is key throughout the credit-building process, says Dezso. It is much better to go slowly and develop b credit than to apply for too many credit cards or a loan that is larger than you can handle.  However, with good credit practices and a little bit of time, you'll have a credit history that you'll be proud to show anyone!

This article was written by Josh at ACCION USA (http://www.accionusa.org). ACCION USA provides business loans up to $25,000 to small business owners who need financing to expand their businesses.