IMPROVING YOUR CREDIT
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 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: 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 |
