Most Americans wonder why they get denied when they submit their first credit application if they do not owe money to no financial institution. Would you be able to lend me ten thousand dollars without knowing me? No, right? That is why financial institutions have to use credit reports to evaluate customer’s credit behaviors.
Credit score is influenced by four factors: history of payments, length of accounts in good standing, inquiries, and types of accounts.
It is difficult to obtain history, length with accounts, or types of accounts when you do not have any kind of previous history. Most credit agencies will turn you down or denied your application because they do not know you. To start building a good credit score, you must establish a secured account. Some institutions call it “secure credit cards” or “secured loans.” Secure products will help you generate history with a credit institution with a low-cost and without risk of generating unnecessary debt. A secured account starts by initiating a savings account which will be taken “hostage” by the financial institution in case you do not repay the loan they will give you for the same amount on the savings