What Is Your Credit Rating Now?
If you have any charge accounts now, or have ever borrowed from
the bank to buy a car, or if you are paying on a mortgage, there
is credit information on you. Up until a few years ago, you
could only guess at what your credit rating was, because the
credit bureaus who keep track of borrowers wouldn't tell the
borrowers anything! But that's been changed through several
laws, and now the bureaus have to send you your credit file when
you request it. If you've been denied credit on the basis of
their record, they will send you a copy of that record without
charge, if you request it within 30 days of the credit denial.
If you haven't been denied credit but just want to know what
your file says, you must pay a small fee to find out.
Why You Really Must Get Your Credit Report
It is well worth your trouble to obtain your report. You may
well find (because thousands do) that there is a piece of
misinformation that is injuring you without your knowing it,
which you can straighten out by submitting copies of documentary
proof (never mail originals of anything important - it may get
lost in the mail) of bills paid, payments made, etc.
What To Do If You Are "Unlisted"
If, for one reason or another, you are not listed, or they have
insufficient information on you to "rate" your suitability for
credit, you must take steps to correct this.
What To Do If You're New in Town
If you have no record because you hold no cards and have no
charge accounts, or because you have just come in from
out-of-town, then you'd better start assembling one. It may
sound a little ridiculous, but nobody will lend money to
someone's who's always paid cash! You have to have borrowed
money or run up charges and paid them back to be able to borrow
larger sums as time goes along.
Start with the local merchants in your immediate area, the ones
that already know you. Even if you don't need it right now, ask
them if you can set up a charge account with them. In most
cases they'll be glad to oblige you, they already know you're
local, and that you patronize them regularly. when you get the
credit, charge a few items each week, and pay your account
promptly when presented. In this way, you'll build up a good
credit record with these merchants in a short time.
Get Your Bank In on the Act
Go to the bank where you keep your checking account, and ask to
borrow a nominal sum (say $500), which they are unlikely to
refuse you. Do this even if you don't need the money, because
you do need the repayment record on their books. Repay the loan
on a regular basis when due. Do not accelerate, and pay it all
back the next month. Strangely enough the banks do not like
that, because to them that indicates a "feast or famine"
situation, rather than a steady payer. The interest cost on
this loan, even if you have no need for the money, will be well
worth paying to build up your credit record. Besides, you can
minimize this interest cost by depositing the money you have
borrowed (assuming you do not immediately need it), in a savings
account, and collecting the interest, which will defray a good
part of the cost of the interest you are paying.
Once these charge accounts and the loan have been operating for
a while, proceed to stage two, and ask a large local department
store for a charge account. Most likely they will be happy to
give you their charge card. Build up your rating with them by
occasional purchases and prompt payment, and then you proceed to
stage three, and apply for the less selective national credit
cards, Master Charge and Visa, which you should a this point be
able to get without too much difficulty.
On the Road
Once you have national bank credit, it's easy to get credit from
all the oil companies, which makes traveling around a cash-free
pleasure. Some gas stations take national cards like Master
Charge, but most only take their own credit cards, so you should
not overlook these, just because you already have others.
First Class With No Cash
Once you have all the other cards, a paid-up loan or two, and a
fine record of promptly paying your bills, you may be able to
get the most selective cards of all, the "travel and
entertainment" cards. These are American Express, Diners' Club
and Carte Blanche. These cards operate on a different system
than ordinary retail store cards, or the national bank cards,
both of which are revolving credit plans on which you pay a
small amount each month, until your balance is all paid up. The
store or bank hopes you take a long time to pay, because they
make their money on the 1 1/2% monthly (which is 18% yearly!)
finance and, or interest charges.
The T&E cards, however, expect you to pay your bills at the end
of the month! Let your account get 60 days or more delinquent,
and they'll cancel you out as fast as a flash of lightning.
Although these cards do not charge interest, they do charge you
a fee for membership.
Let Me Entertain You
So how do you get these marvelous bits of plastic that open up
the doors of exotic nightspots in Tangiers as easily as your
nearby Howard Johnson's? Your good credit record, that you have
already established, will be the most help. Since the T&E
people want you to pay your bills promptly each month, they want
to know that you have a steady record of paying bills promptly
to other people.
So first American Express, or Carte Blanche, or Diners' Club,
looks at your credit record. Then at your salary or other
income. Most of them have cut-off points below which they will
not grant their cards. But even if you earn more than their
minimum requirements, they don't automatically okay you for
their credit. They look at your stability! How do they measure
stability? How long have you worked on your present job? If
you don't have a minimum of two years of steady work in one
place, they may not consider you at all. How long have you
lived at your present address? At your previous address? And
do you rent an apartment which means you could move tomorrow, or
do you own your own house, which means you will probably still
be in the same place next year. How stable is your livelihood?
Do people in your field of work get laid off frequently?
Now You Can Really Start to Live!
Once you have all the major national credit cards in your
wallet, you can live like the millionaires do, even though you
haven't yet become one. You can go into a fancy store, or even
call them on the telephone, and order those wonderful luxuries
which make life so much more exciting, like furs and diamonds,
for your loved one, or new furniture or appliances for your
living room, bedroom or kitchen. All of this can come true in
the wonderful world of credit. Now in today's world you can
charge almost anything on a credit card, from admission to a
nudist camp in Yugoslavia, to medical care at a hospital in
Atlanta, university courses in New York City, funerals in Los
Angeles, and even the services of legal prostitutes in Las Vegas.
Erasing the Bad Marks
But what do you do if you haven't been able to pay your bills
promptly, or you've run up more than you can handle, or you
don't have a very stable work history? Do you have to give up
the dreams of credit-card living? Not entirely!
Once you find out which credit conditions in your background are
the most troublesome (from the credit report you have already
sent for), you then start to create new conditions that you can
then base your records on. If you were out of work, perhaps you
can get a reference from someone you know who owns a business
and is willing to say that you worked for him, if the credit
card company checks your references. If your bills are too
high, and you've missed a few payments, perhaps you should see
one of the free consumer-counseling services that are springing
up in the larger cities which will enable you to consolidate
your debts into a manageable amount. Remember that credit card
companies don't care very much about the amount you owe, but
they care a lot about whether you pay steadily, every single
month, even if the amount each month is small, and the entire
debt will take years to pay off!
Don't overlook ways to establish good credit without buying
anything! For example, you have telephone service in your own
name, you have a record of paying bills to them which is then
part of your credit record. The same for your gas and electric
supplies from you local public utilities. These services, when
they are in your name, will show prospective merchants that you
do have a record of paying bills, even if you haven't yet
established retail store or bank credit.
Using Your Credit to Save Cash!
The world of credit has one more trick you should know about,
this one that actually saves you money right on the spot. All
you have to do is carry your credit cards with you when you go
out shopping, even if you intend to pay by cash. Then you have
to keep an eye open for the smaller, personal service-type
shops, where the boss himself, or one of the partners, is always
present (you'll see why in a minute). As you walk in, check out
the decals on the door to see which credit cards they accept.
Then select your purchase in the way you normally would - taking
your usual care to be sure you're getting the right item at the
right price. When the deal's all set, produce your credit card
(one of those you know he takes), and say "I'd like to charge
it, please!" At this, the merchant's face will probably drop
about six feet, but he'll take your card and walk over to the
imprinting machine (or maybe to the telephone to check your
credit status). He hasn't got much choice, he has to take your
card if he uses their decal in the window. But the point is, he
hates to, because he has to pay the credit card company a
percentage of the sale, usually somewhere between 6% and 10%.
Now, while he's vulnerable, is the time to hit him with a
casually dropped remark like "say, how about knocking 5% off the
price, and I'll pay cash instead?" The chances are he'll accept
your offer, because it saves him the other part of the credit
card company percentage, and because it saves him bookkeeping
chores, and waiting from 3 to 7 days for his money to be
credited to him by the credit card company.
The reason why this gimmick doesn't work in big stores is that
the clerk doesn't give a damn what it costs the boss, and has no
authority to take an additional percentage off the price, so
he'll just go ahead and write up your credit card invoice.