Ten Steps To Building A Good Credit History


Are you thinking of buying a house? Do you want to buy a new car to replace that old wreck? Trying to get insurance on you home, auto, or life? In each of these situations, what's on your credit report will determine if you can get a loan or insurance and what rates you'll have to pay.

If you're trying to build or repair your credit history, you have a daunting but not impossible task in front of you. Lots of people have been where you are and today they have good credit. With time, discipline, hard work, and by taking the proper steps, you'll be able to build a good credit history too.

To build or rebuild your credit history you need to take certain steps:

Develop a budget and live by it. Whether your building credit for the first time or rebuilding credit, you need to know how much money you have coming in each month and how you're spending it.

Start by listing your income from all sources. Next list all fixed expenses (rent, mortgage, car payments?). Finally list all of your variable expenses (entertainment, recreation, clothing?) no matter how small they are. Writing down and tracking your expenses will help you to understand your spending patterns and you'll be able to see where you can save money by making lifestyle changes.

Open a checking account and use it responsibly. Lenders want to know that you have a relationship with a financial institution and that you have a checking account available to pay your bills. Don't overdraw your bank account; in addition to possible damaging your credit record, you'll be charged fees.

Pay your current bills on-time and pay them in full. Paying your bill on-time puts positive information on your credit record. Late payments or missed payments count against you.

Review your credit report annually. Contact Equifax, Experian, and Trans Union to get copies of your credit report. You should get a copy of your credit report from all three reporting agencies because some creditors don't report to all three agencies. If you're a member of a credit union, check to see if your credit union offers discounted credit report ordering for its members.

Fix any errors on your credit report. If you find errors on your credit report, contact the credit reporting agency and the creditor (in writing) to get the errors fixed. Check your credit report to make sure that negative information like late payments, delinquencies, liens, and judgments against you have been removed after 7 years; bankruptcies should be removed after ten years.

For more information on how to dispute errors on your credit report, visit the Federal Trade Commission website at: http://www.ftc.gov/bcp/conline/pubs/credit/crdtdis.htm.

Apply for a credit card. If you're rebuilding your credit history, consider applying for a secured credit card. To get a secured credit card, you'll need to deposit funds with the credit card issuer and your credit limit is usually equal to the amount you deposit. A secured card can be used the same way as an unsecured card and your timely payments will help to improve your credit history.

Apply for a department store or gasoline card. These cards are usually easier to get than major credit cards and they come with smaller credit limits.

Establish an account at a credit union and take a loan out on it. This is a secured loan. You'll have to pay interest on the loan, but if your payments are reported to the credit bureaus, the small interest fees will be worth the positive information that is added to your credit record.

Don't max out your credit cards. Maxing out your credit cards can hurt your credit score. Try not to use more than 30% of the credit you have available to you. Part of your credit score measures the amount of credit that your have available to you and how much you're using. The more credit you're using, the more negative impact on your credit score.

If you get into trouble with your credit, get help. Don't wait until creditors send your accounts to debt collectors. If you can't make a payment contact the creditor and make arrangements to make the payment. If you feel that you're over your head in debt get help from a debt counselor.

You can contact Equifax, Experian, and Trans Union at:

Equifax: www.equifax.com/

Experian: www.experian.com/

Trans Union: www.tuc.com/

About The Author

Drahcir Semaj is a freelance writer. You can contact him at drahcir@drahcirsemaj.com. Or visit his website at http://www.drahcirsemaj.com

MORE RESOURCES:
RELATED ARTICLES
Credit Suicide
Few things influence the home buying process more than your credit. I like how Clark Howard refers to the three credit repositories as, "the three screw-ups".
Tackling Bad Credit
The first time I heard the term credit history was when I approached a lender for a secured loan. Being a first timer I was completely ignorant of the procedure and didn't even know that a credit record of our transactions is prepared by some credit reference agencies.
The Credit Card Surprise That You Need to Look Out For
Companies that issue credit cards want to make a profit. No one disagrees with that.
Credit Reporting: How Does It Work?
In order to determine a consumer's credit worthiness, creditors and lending institutions have come to depend on credit reporting agencies. Credit reporting agencies supply individual reports that provide consumer specific information for lending purposes.
Credit and Its Cost
What is Credit? Credit is money granted by a lender (or creditor) to a debtor (or borrower) whereby the lender defers receiving payment of the debt for a period. In exchange for the credit allowed, the lender will get back the money lent plus interest.
10 Signs You May Need Credit Counseling
Debt management programs can be of real help for people that discover they cannot face their debts. At first, they will attempt to solve the situation all by themselves by cutting down on spending and keeping a close eye on accounts.
Dont Dig Your Own Pit
If you want to enjoy your life out of spending, enjoy if you have your own resources and money.But don't enjoy your life by becoming a debtor to somebody.
5 Ways To Raise Credit Score
It's not as hard as you think to raise credit score. It's a well known fact that lenders will give people with higher credit scores lower interest rates on mortgages, car loans and credit cards.
The Hitchhiker's Guide To Insanity
A new sickness is plaguing the UK called Denial. Denial has resulted in a national personal debt of almost £1.
Why Should You Use Credit Cards
Believe it or not, the way society, especially the commercial side, is set up these days, the only alternative to using credit is to pay cash for everything. But it's actually quite hard to do that.
All You Wanted to Know of Bad Credit
Martin Henderson is in a fix these days. Because of his failure to repay a loan he had taken a few years back, he has been adjudged as a bad credit case.
Credit Cards - Why Prepay?
With prepaid credit cards, you get the practicality of plastic while choosing exactly how much debt to charge. By taking charge of your personal financing, you determine your own limits, to the penny, and change them any time you need to.
The Right Way To Credit Repair
If you have a bad credit rating, then you might find that your ability to get financing, loans, and even some jobs is greatly diminished.Once you have a bad credit rating, it might seem like there's nothing that you can do about it? but you don't have to believe that.
Preventing Credit Card Mess
Credit card debts problem is extremely common today. It is usually the first sign of longer term financial troubles.
Credit Cards And Loans - So Many Options - So Little Time
Credit Cards and Loans sounds like just two things, but in actuality, it is dozens of things. Due to a combination of user preferences, lifestyles, and marketing ideas, there are dozens of different types of credit cards out there.
All Is Fair In Love, War, and, Your Credit Report - At Least It Should Be! Understanding the FCRA
Fact: Over 150 million Americans have credit report with the three major credit reporting agencies. Approximately 50 million of these credit reports contain errors, many of which are inaccurate.
Credit Enhancements: Seven Tips For Enhancing Business Credit Transactions
What are the avenues available to businesses with weak credit profiles or to companies pursuing credit transactions that are perceived as too risky by credit providers? Many companies apply for credit at banks, finance companies or equipment leasing firms and are routinely rejected due to the high degree of perceived credit risks. When approaching a credit provider, it is helpful to understand what can be done to reduce the risk of a credit transaction in the eyes of the provider.
Defeating Credit Card Debt With Self Control
Credit card debt is a major social problem in some Western countries. To rid yourself of credit card debt, it is best to recognize the problem as both a social and individual problem.
Is Your Credit Score Being Held Against You?
Credit Scores That HurtIs your credit score being held against you?More and more the staples of life depend on your credit score. Your mortgage, insurance premiums, employment opportunities and even your landlord may be using your credit score to determine your financial future.
Inflexible Friends and Plastic Assets, Why Money isn't Buying Love Anymore
Consumers reject financial advice in favour of financial frivolityIt would appear that even though their "friends" aren't as flexible as they used to be, consumers are still stretching their credit cards beyond the comfort zone.The vicious circle of debt manipulation involving banks, consumers and commercial credit companies is putting consumer spending under strain, as funds begin to dry up.