CREDIT BUILDING TIPS
Establishing a good credit history has never been as important as it is today.
It's not just that you'll need good credit to get decent rates when you’re ready to buy a home or a car. Your credit history can determine whether you get a good job, a decent apartment, a deal on your cell phone and reasonable rates on insurance. One mirror misstep, a late payment, or spending over your credit limit can haunt you for years. If you're just starting out, you have a once-in-a-lifetime opportunity to build a credit history the right way. Here's what to do and what to avoid.
- If age are previous credit troubles have prevented you from obtaining or re-establishing your credit, you may find it easier to obtain credit by applying for a gasoline card or a credit card with a department store.
- You may also consider applying for a secured credit card. You will be a required to deposit a specified amount, usually $300 to $500 dollars into an account in their bank, and you will be issued a major credit card in the amount of the deposit. Shop around to find a bank that reports the card as an unsecured credit card on your credit file.
- Take out a small loan from your credit union bank. Deposited the money into your savings account and pay the loan back monthly.
- If you currently have credit, ask your creditors to increase your credit limit. This will improve your credit utilization ratio thereby improving your credit score. Just remember not to use the additional credit.
- If you do not have a checking and saving account, apply for both. Having these accounts establishes you as part of the financial community and allows you to manage your money.
- If a spouse or relatives has good credit, ask to be added as an authorized user to one or more if their accounts. This should never be done as a short-term fix to obtain a loan but should be used as a long-term strategy to help rebuild your credit. A word of caution: be very careful of whom you choose because if they make a late payment or default on a loan, it will appear on your credit report as well.
- If you are faced with a financial crisis due to a job loss or unexpected medical bills, consider is asking a family member for a short-term loan to pay down your debt.
- Your credit file also includes personal data such as your social security number, employment information, date of birth, and names and addresses you have listed when you applied for credit. Although this information is not used to calculate your credit score, it may be reviewed by banks and mortgage officers and used to make leading decision. Review your credit file for the following:
- Request that the credit bureau delete any social security numbers that are reporting in error.
- Make sure that your employment history is up to date and includes all positions you have held for the last five years.
- Make any necessary corrections, additions or deletions regarding your current and previous addresses.
- Your credit score changes regularly as your creditors provide payment and account data to update your credit file. Your credit scores are always a reflection of your credit file at the moment in time the credit is pulled.