Steps
- Shop for the lowest interest rate and for cards with low or no annual fees.
- Pay bills as soon as they come in and definitely by the due date noted on your bill. Only spend what you can afford. Remember credit is a LOAN.
- Pay credit card bills in full each month, or at least pay more than the minimum amount due.
- Don t accept a credit card or take out a loan simply because the issuer thinks that you qualify for it. Only you know what you can afford to pay back.
- Don t "max out" your credit card. You may have trouble paying it back and it will reflect poorly on your credit report.
Tips
- Credit Report and Credit Scores
- Your credit report, which gives a history of your borrowing, is used by lenders to assign a credit score. A credit report includes your name, address, and social security number. It includes your history of paying off credit card debts, public record information such as tax liens, court judgements for money owed and any other loans you have outstanding. Lenders may access your report from a credit bureau and use this report to determine whether or not they are willing to take a risk on lending to you.
- FICO scores refer to Fair Isaac and Co. credit scoring that has become the most popular credit scoring method in the lending industry. Mortgage lenders and credit card issuers are far more likely to issue a loan when the borrower has a high FICO score. FICO scores have recently become available to the public, although there may be a fee. See the reference list below for how to obtain your FICO score.
Warnings
- Read and understand the fine print
- Remember that if you enter into a credit agreement with a spouse or a significant other, you will be held responsible for any debt the other party incurs on that credit card.
- Make sure the issuer reports to a credit agency. If it doesn t, your positive payment history will not be reflected in your credit report.
- You have the right to view your credit report and to dispute inaccurate information. Studies have shown that credit reports often contain errors. It is your responsibility to identify any errors that may exist on your credit report.
- Be aware that when you apply for a loan, the lender will most likely charge you for the cost of obtaining your credit report. The charge is usually not more than $15. Remember to look at all fees that you are being charged and question the costs if they seem too high.
Sources and Citations
- http://www.badcreditloandirect.com/Establishing-Credit-History.html
- http://www.quick-guide-usa.com/establish-credit.html Establish a Credit History from Scratch
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