Ten Steps To Building A Good Credit History

Ten Steps To Building A Good Credit History
by: Drahcir Semaj


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: http://www.equifax.com/

Experian: http://www.experian.com/

Trans Union: http://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