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 creidit history
too.
To build or rebuild your credit history you need to take certain
steps:
1.Develop a budget and live by it. Whether your building credt
for the first time or rebuilding credi, 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.
2.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.
3. 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.
4. Review your credit report annually. Contact Equifax, Experian,
and Trans Union to get copies of your creditreport. You should
get a copy of your reports 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
creditunion offers discounted reports ordering for its members.
5. Fix any errors on your credit report. If you find errors,
contact the credit reporting agency and the creditor (in writing)
to get the errors fixed. Check yours 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.
6. Apply for a credit card. If you're rebuilding your crdit
history, consider applying for a secured creditcard. To get
a secured creiit, you'll need to deposit funds with the creidit
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.
7.Apply for a department store or gasoline card. These cards
are usually easier to get than major creidit cards and they
come with smaller crdit limits.
8. 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.
9. Don't max out your credit cards. Maxing out your creditcards
can hurt your credit score. Try not to use more than 30% of
the credit you have available to you. Part of your creditscore
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 creditscore.
10.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.
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Equal
Credit Opportunity:
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