Getting your credit started

Getting your credit started may seem like one of the hardest things to do. Majority of the time, most first time borrowers hear the same dreaded phrase..."you need a cosigner."

Here's what lenders want to see:

Stability: How long have you been at your current job and residence? The is one of the key factors in determining borrower eligibility. Job time can be your best friend, or your worst enemy. If you have been on your job for more than two years, you are one step closer to getting approved on your own.

Also, your residence time comes into play. Being at your residence for longer than two years is also a

positive factor when reviewing credit. If you are renting, and you have two years of history at the same

residence, you are showing the ability to manage your finances effectively.

Ability to pay: Lenders look at your ability to repay a debt based on your current income. When you

apply for a loan, your income is weighed against other bills which you owe. For instance, if you pay rent, that amount reduces your disposable income. In order to qualify for most loans, your disposable income cannot be less than 50% of your total income after taxes.

Willingness to pay: Willingness and ability are not the same. Lenders look at your willingess to pay your debt very carefully. Collections on your credit bureau are an indicator of your lack of willingness to pay. Lenders may also ask for copies of your most recent or a history of cell phone bill, utility bill, insurance bill, etc. to see that you are paying on time.

Collateral: Collateral can be one of the biggest factors in getting your first loan approved. If the value of the collateral is substantial in relationship to the loan applied for, it shows that your are serious about getting your credit started right. Equity in a vehicle, especially for a first time car buyer, weighs heavily on a lenders approval decision.

If you can meet 3 out of 4 of these categories, your chances of getting a loan on your own are pretty good.