I’ve heard people say, “You know what? I don’t care about my credit score. I don’t want to borrow a bunch of money. I don’t want to be indebted to a bank.” Just because you don’t want to borrow a bunch, and just because you don’t want to become indebted to a bank, it doesn’t mean you shouldn’t have a good credit score. A good credit score allows you to have flexibility and freedom that if down the road, you want to open a business or you want to buy that dream house that you’ve always thought of, you can do those things. Things can change, and if you get to the point where you want to borrow money, then the banks are going to charge you a lot less. Just because you don’t want to be indebted to the bank doesn’t mean that you shouldn’t have a good relationship with them. And that’s where the credit score comes in. It’s very important that you keep that credit score up, even if you don’t plan on going into debt, even if you don’t plan on using it. You never know what’s going to happen in the future.

So let’s say you have no credit at all or terrible credit. How do you start building it up? The easiest way is to get a prepaid credit card. Here’s what the prepaid credit card will do: you give $500 to a bank, they put that money on a credit card, and it goes on your credit report and starts building credit history with those credit agencies. You might say, “That’s kind of dumb. I’m giving $500 just so they can give $500 back.” But the benefit there is you start building that relationship. Don’t have to pay any kind of fees or charges as long as you pay it off each month. And then at the end of it, you can always get that $500 back if you want it.

Perhaps you don’t have any credit now and you’re thinking, “You know what, maybe now’s the time”, or let’s say you’ve had some problems in the past with your credit. Look at one of those prepaid credit cards that will go on your credit and start building a good rapport with these banks.

Securities and advisory services offered through Madison Avenue Securities, LLC, member FINRA SIPC, and a registered investment advisor. Madison Avenue Securities, and Don Anders are not affiliated companies.