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Sometime
in the future, if you plan on buying a house or a car, you will
need to get a loan. In order to get a loan, you will need to have
a good credit rating. To have a good credit rating, you need to
build
good credit. So the question is, how do you build good credit?
There are three main credit reporting bureaus nationwide (Equifax,
Experian, and TransUnion)
that obtain information from various financial institutions and
create a report for each individual. Unless information is provided
to the bureau from someone who has extended credit to you, you will
not have a credit history. So in order to create a credit history,
you need to make wise financial choices. Information contained in
a credit report includes your full and/or previous names, social
security number, home address (and previous addresses), current
employer, current and past payment information (late payments, delinquencies,
etc.), outstanding balances, public records (such as bankruptcies
or overdue property taxes), and a list of everyone who has
recently asked for a copy of the report. So the simple answer to
good credit is to pay all of your bills on time and don't have any
outstanding balances. However, there are a few things you should
know. Maintaining checking and savings accounts and paying off credit
cards on time are the first steps to good credit.
When
you apply for a loan, your credit
score is evaluated by lenders from the information they receive
in the credit report. The higher your credit score the better. Here
are a few tips on how to keep your credit score high.
- Stay
within your credit limits. Ideally you should stay within 30%
since lenders look at how much credit is available to you, and
how much you are actually using.
- Avoid
having too many credit cards. When your credit score is computed,
if you have too much credit available to you, it can be seen as
a risk.
- If
you choose to close a credit card, make sure your credit report
indicates that you, the customer, requested it to be closed.
- Check
your credit report once a year. If you were denied credit recently,
or are unemployed, you have the right to a free copy of your credit
report. Beginning in 2005, everyone will be entitled to one
free copy of
their credit report. By reviewing your credit report, you can
make sure there are no errors on your report which could indicate
fraud. If you find any errors, you need to contact all three credit
bureaus and have the error corrected.
Additional
Resources:
Order
Your Free Credit Report click
here Equifax
click
here Experian
click
here TransUnion click
here Studentdebthelp.org:Credit click
here
How
to Read and Understand Your Credit Report
click
here How
to Maintain Good Credit click
here
Do's
and Don'ts for Establishing Good Credit
click
here
Bad
Credit Hurts in Many Ways
click
here
The
Future of FICO
click
here Establishing
Credit History click
here
Develop
a Credit History in College
click
here
Advantages
of Credit Cards
click
here
Disadvantages
of Credit Cards
click
here
Ask
Basic Questions (Buy It or Not)
click
here |
