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:
 GulfNews | Bush: US will work with partners on credit crisis The Associated Press - WASHINGTON (AP) — President Bush says world's wealthiest industrial countries will work together to attack the credit crisis spreading around the globe. ... World Leaders Offer Unity But No Steps To Ease Crisis Bush vows coordination with world powers on financial crisis Time to Act |
 Boston Globe | Without real leadership, we face disaster guardian.co.uk, UK - There is a combination of a worldwide bank run, seizure of credit markets and collapse of asset values that could plunge the globe into a depression. ... Video: Overseas Markets Fall on Financial Turmoil Fears Asian credit default costs soar to record - traders Stocks rally fades on credit market worries |
 The Associated Press | US will work with partners on credit crisis: Bush CBC.ca, Canada - It was the 21st time in 26 days that the president has spoken publicly about the credit crisis gripping financial markets and dragging down stock markets. ... Video: Bush: 'We Must Work Collaborately to End Crisis' |
Is my credit union safe? Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer The government-run National Credit Union Share Insurance Fund insures most deposits at credit unions, ... Credit unions alternative to banks Got Your Money in a Credit Union? You Too Are Safe In tumultuous financial times, credit unions might be an option to ... |
 China Daily | Lehman Credit-Default Swap Payout Could Climb as High as $365 Billion Washington Post, United States - By Heather Landy NEW YORK, Oct. 10 -- In what may shape up to be the most expensive payout ever in the credit-default swap market, sellers of insurance ... STOP FINANCIAL WMD'S: Credit Default Swaps Lehman Credit-Swap Auction Sets Payout of 91.38 Cents (Update1) Insurance on Lehman Debt Is the Industry’s Next Test |
 BBC News | Credit crisis should not hurt poor, ministers urge Reuters - By Lesley Wroughton WASHINGTON (Reuters) - Major economies should not use the global credit crunch as an excuse to renege on aid promises to poor countries ... Video: IMF: Timing right for G7 Credit CRISIS ALERT IMF endorses plan by rich countries to fight credit crisis |
 Los Angeles Times | Fears Grow That Tight Credit Could Crush GM, Ford NPR - Standard & Poor's downgraded the credit of both companies and their financing arms this week. AFP/Getty Images Ford F-150 trucks sit at a dealership in ... Video: Money Minute: GM, GE, Oil CREDIT WATCH HITS GM, FORD GM, Ford too big to fail? |
Is the era of easy credit over for the long haul? International Herald Tribune, France - For Clark, and for a nation of consumers heavily dependent on credit, there are growing signs that those rough times could prove to be more than just a ... |
 WNCT | Anatomy of the American Financial Crisis: How It is Turning into a ... Center for Research on Globalization, Canada - Its failure created a domino effect among other international banks that had lent to each other in the international credit chain. ... Where did all that 'lost' money go? Credit freeze sees small cracks Market news this week for strong stomachs |
Financial troubles spread to credit unions Los Angeles Times, CA - By E. Scott Reckard, Los Angeles Times Staff Writer It's not just giant banks on the brink these days: Losses are clobbering nonprofit credit unions that ... |
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