What’s the best way to build good credit?
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I’m starting to build my credit, and looking for special credit building tips. Thank you
RE: Credit building tips
The best way to build good credit is to pay all your bills on time. Building good credit is about two things:
- Creating a stream of positive information
- Taking care not to accumulate negative derogatory items
Creating a stream of Positive information is best done by using a credit card. You will need at least two years of timely payment for your score to climb to the 700 area and above. However, for an excellent credit you will need at least two credit cards and probably an installment loan (either a secured loan or a car loan).
Avoiding negative information is very simple. Only thing you need to do is to ALWAYS pay your bills on time. Credit Cards statements, Loans, utility bills, medical bills, rent, gym…you name it. Remember – a single derogatory item will do much more damage than what 2 years of timely payment can render.
If you have no credit history, you will have problems getting any kind of credit card. Especially if you’re under 21. New laws require that people under 21 provide proof of sufficient income to qualify for the card. Credit card companies will also want to see at least 12 months of work history.
Your best chance would be to start with a secured credit card. Use the card for regular purchases, wait for the statement, and pay the balance in full every month. In about a year, you should be able to get a regular card and/or convert the secured card to a regular account.
See keeping-a-good-credit-score.html for a list of credit building Do’s & Don’ts.
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