ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Credit Crunch: Establishing Good Credit

Updated on August 24, 2009

What is the best policy to handle all your personal and household finances? Operate on a strictly cash basis! That's a surefire way to avoid sinking into credit-card debt, which so many Americans unintentionally do, often with disastrous consequences. However, a credit card can be extremely handy for renting cars, buying airline tickets, booking hotel rooms, traveling abroad and, of course, for emergencies.

Another compelling reason in favor of having a credit card, one that takes the long view, is that a card provides a suitable manner for lenders to understand how responsible you are with your finances. It's next to impossible to obtain a mortgage, or an automotive or small business loan unless you have a considerable and fairly spotless credit history.

One of the favorite ways for people to get their first card is with a "secured card." These are MasterCard and Visa cards that look just like normal credit cards, but they are issued with one very important difference: a secured card has a credit limit which is actually the amount of money you have on deposit at that time with the bank that issued the secured card.

This is not a credit card as no one is issuing you credit. You have money set aside in a particular account and whenever you buy something on that MasterCard or Visa, that amount gets debited. It's kind of like a debit card but with a huge difference: It has the MasterCard or Visa symbol on it so you can use it anywhere you can use a conventional credit card!

Make sure you deal with a trustworthy card issuer as there are a lot of phonies in the secured-card world who will take your money and give you a worthless chunk of plastic in return. Don't respond to TV ads, 900-number telephone solicitations, supermarket tabloids or other come-ons. Be smart about this!

Part of your reason for getting a secured card is to establish credit and show a pattern of on-time payments, so make absolutely certain that the bank you select reports your record to one of the three major credit bureaus, and that it does not flag you as the holder of a secured card (secured cards are also popular with consumers with poor credit histories).

When shopping around, look for a card with a conversion option. This makes it possible to convert to an unsecured card after a given time period, provided you've been financially responsible. Ask, too, when you can get back your collateral. Many banks will return your security or let you convert to a standard card within 12 to 24 months. You'll also want to know what the interest rate is on outstanding balances, as typically, the more you deposit, the lower the rate.

Two other ways to create a credit history so you will at some point in the future qualify for a conventional credit card: (1) Get a petroleum company card and charge all your gasoline on it or (2) get a department store credit card with a big retailer like JC Penney or Sears. Ensure that the retailer reports your payments to at least one of the three major credit bureaus.


    0 of 8192 characters used
    Post Comment

    No comments yet.


    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at:

    Show Details
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the or domains, for performance and efficiency reasons. (Privacy Policy)
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)