06-03-2014 12:49 PM
David Blyar created a plan to help his son, Esteban, build a credit rating in just nine months.
As told to Kathy Sena
My son, Esteban, began building a credit rating right after his 18th birthday.
After opening checking and savings accounts, Esteban applied for a secured credit card, which allowed his payment activity to be reported to all three main credit bureaus: Equifax, Experian and TransUnion. This reporting can help establish credit. The card we chose also offers rewards points and doesn’t charge an annual fee.
Esteban keeps his balance well under his credit limit and uses his secured card much like a debit card. He doesn’t wait to get his monthly bill. He checks his charges online frequently and pays the current amount due every weekend with an electronic transfer from his checking account.
|Credit Score Factors|
After he mastered the use of the secured card, Esteban got a small secured loan from a credit union. These loans generally have a lower interest rate because the bank is taking a lower risk and can collect the collateral if you default on payments. He deposited $400, which served as collateral. Then Esteban applied for a secured $300 loan. He set up automatic payments from his savings account to pay off the loan over the next six months. The interest rate was 2.25 percent, just pennies to help establish a good line of credit.
Nine months after Esteban turned 18, his credit score was 761, according to Equifax, whose scores range from 280 to 850, with higher scores indicating lower credit risk. Now 19, he has enlisted in the Marine Corps and plans to apply for a small auto loan for a used car when he completes boot camp in June. With the good credit he’s established over the past year, I know my son will be successful.
To learn how a USAA Bank secured credit card can help build or improve your credit score, visit usaa.com/securedcard.
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This credit card program is issued by USAA Savings Bank, Member FDIC.
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