You need money or a car badly but you have no credit history. You don`t even know what it means and how it affects your credit score. You are new to these things actually. But don`t despair. There are so many who too have no idea what these credit terms are all about.
Credit history is a report by credit bureaus which are based on the compiled data sent by credit card companies, lenders and insurance brokers. It shows the entries of the loans and credits you have taken in for the previous years. It also shows default accounts, unpaid balances and even red marks, such as bankruptcy and court settlements. This is a very critical aspect of your credit situation. It requires you to be diligent and attentive to the entries so you can dispute on the errors and repair the inconsistencies. You are also given the opportunity to check your reports annually from the three main credit bureaus - Equifax, Experian and TransUnion. Don`t worry about being charged. The government has already made it into a law to allow consumers to have an annual review of their own credit reports.
Credit score on the other hand is a three figure score that are calculated based on the secret formulas of score providers such as FICO and Vantage Score. These numbers are calculated based on weights. For FICO for instance, credit utilization consists of 30% of the score. You need to understand the weights and components of the scoring system used to determine your score.
At least know your FICO score, which has a range of 300 to 850 - with 850 being the perfect score. Scores can be obtained after paying for them. Though the government allows free credit reports, it is not applied by lenders. Because of the numerous scoring system used in the country, free credit score can be impossible. However, you can only get access to your free credit scores if you get an "adverse action". That is being rejected in a loan or credit card application or insurance policy. These lenders and insurance companies have to present to you the scores that they have based upon for their decision. If you see something wrong, it`s either the credit report the scores are computed on is erroneous or these lenders are just too careful about approving you.
Now you know the two credit aspects affecting your credit life, you may be asking, what is you have no credit history? What are your chances of being approved if lenders are so strict about credit history backgrounds? Again, do not despair. There are solutions for you. Just take note that you have an advantage over those with a bad credit history. Available solutions for you can be Bad Credit Secured Credit Cards and the unsecured type. There are many banks in America that will provide you this. Some requires you to pay a one time application fee, meaning no annual fees to be paid. Since this is your first credit card, you have to learn further than just the terms. Learn to manage your credit by paying on time, prioritizing needs and getting a credit only when needed.