When you started out on your own, whether it was moving out of home for the first time or getting that first job what things did you do that helped your credit rating/history?
The two most important things you need to do in order to build great credit is 1) Pay each bill on time or ahead of time. 2) Keep the balances on your credit cards as close to zero as you possibly can. Doing these two things will keep your credit score as high as it can possibly be. Also try sigining up to receive email notices to financial blogs like http://honestbanker.blogspot.com they always have good tips on how to improve your credit, repair it, or build it, among lots of other things.
My son, who just turned 18, applied for a credit card. He was instantly accepted... with NO co-signature and NO security deposit. He has no credit history... So... that's pretty sweet.
What he did have was more than enough money in his account to cover the credit card line of credit, and he's been saving for a few years now... He's been at the same job for 2 years.. He's been living at the same address for 18 years.. He's got a good picture of stability and asset to credit ratio...
This is the best way to establish a credit rating... These are what the creditors will look for..
The main idea is to do exactly what the credit agreement asks for.... pay the bill on time and as agreed. And... it's a good idea to have more than one credit card... as it tells the credit bureaus you're acceptable to more than one creditor.
My posts this week have been a credit series, aimed at teaching people more about credit, ways to imrpove, and how your credit score is calculated. Tomorrow I will be talking about some tools that can help monitor credit.
Start early and carefully. I got my first credit card at 18, but my husband waited until he was 21 or so. By the time we were 25, I had 7 years worth of on-time payments and staying under my credit limit. My husband had used his credit well, too, but only for 4 years at that point, and the three year difference was significant when it came to what credit cards we were able to get, and our applications for auto loans. When my sister turned 18, I encouraged her to immediately get a credit card and had a good long talk with her about using credit wisely.
When I took out cards, I paid the bills. That is the biggest thing. Pay them off. Don't treat credit like free money, treat it like an extension of the money in your bank accounts.
If you take out a car loan, pay it and pay it on time. Think very strongly about not taking credit if you cannot afford something.