How To Establish Credit Through Your Personal Bank
Remember I suggested in an earlier article that you should get a bank account? And that I said you should get both a savings account as well as a checking account?
This is why: If you have maintained your checking account in good standing (that means that you have not overdrawn it… not even once) and have a growing savings account, your bank is a very good place to start looking for your first credit experience.
Here’s how I suggest that you go about it.
- Approach a loan officer at your bank and explain that you have not yet established credit.
- Explain that you are a customer of the bank and would like to discuss getting a loan or a credit card from them so that you can establish credit.
- Tell the loan officer that your checking account is in good standing and that you have never had an overdraft. Also, indicate that you are willing to allow the bank to automatically charge your checking account for the payment on the due date.
- Point out that you also have a savings account with the bank and that you are willing to put the savings account up as collateral for the loan or credit card that you are seeking.
- Fill out the application. Most loan officers will do this for you or help you with it. You will then need to sign it. Do not request more credit than the amount in your savings account.
- The bank will probably need to review the application and they will get back to you or tell you when to contact you.
However, if you have a savings account in which the balance is more or less in line with the amount of credit for which you are requesting approval, you will probably be approved on the spot. If that is the case, you will be asked to sign a document giving the bank authority to freeze your savings account in the amount that you owe until you pay off the loan and to permit them to take the money you owe from the account if you default on the loan.
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