Building a Good Credit History

BUILDING CREDIT

Establishing credit is very important. The longer you wait in life, the harder it is going to be for you to do so in the future. Below is information that should be used when looking to develop credit. Also featured is information on how to use credit wisely. If you have any questions, please contact us.

Open a bank account
A bank account is not going to appear on your credit report. However, when you apply for loans or credit cards, it is common for bank information to be requested.

Apply for a credit card
It is very important that you apply for a card that you can qualify for. Getting denied for a credit card, when looking to build credit is going to set you back even further in goals. It is usually easier to get approved for secured credit cards or department store cards than a bank-issued card. A secured card will require you to leave a deposit. You will only be able to spend whatever funds you have placed in your account.

It is important that you figure out if the card you applying for is going to report your account activity to the credit bureaus, every month. If they do not, they you are defeating your purpose of establishing credit. Read the fine print before applying for a credit card.

** If you apply for a card, and are denied, find out why. Typical reasons can be your income, employment history, or credit. You should wait a month or so before submitting an application for another card or any other type of credit. Frequent inquiries on your credit profile will be viewed as negatively by any potential creditor. A good idea would also be to order a copy of your credit report to make sure that there are no errors listed that may have affected your approval. Learn how to remove mistakes from your credit report.

Make small purchases and pay your account on time
In order to build credit, you will need to exhibit positive credit activity. Meaning, make a few small purchases every month, but do not spend more than what you can afford to pay every month. A good idea would be to write down all of your expenses and alter spending correspondingly.

If possible, don't leave a balance on your account. In order to reap the benefits of smart credit card use, you will need to make your payment on time every month. If you don't, not only are the interest rates associated with your card going to be increased, your credit is going to be adversely affected.

After using your credit card sensibly for about four months, you may want to consider applying for an American Express, Visa, or MasterCard. These cards will allow you to spend more, with lower interest rates. Also, available credit limits will likely be higher, which is good in case you need money for unanticipated emergencies.

Below are tips on how using credit wisely!
- Don't overdraw your bank account!
Not only will you incur fees from your bank, your credit will be affected negatively.

- Never let anyone else use your credit card!
You will be responsible for all charges incurred!

- Never give anyone your credit card in an email, over the Internet (unless the site is https://) or phone unless you have initiated the transaction.

**If you have poor credit, follow the six steps to re-establishing your credit.

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