Credit History Counts

In this country, having good credit is everything. A person who has good credit is able to get loans and credit cards with much more attractive rates terms from lending institutions when compared to an individual with poor credit. It's that simple. There are lots of very good reasons that a good credit history counts. You may want to buy a house, a car or you might want to fund a college education. And to do this, it is critically important to manage your credit and build a solid credit history as early as possible.

Cash Versus Credit

You may be the type of person who says "credit is not for me, I'll buy everything with cash if I have to." Realistically speaking, while that may be a good thing, it would not necessarily give you brownie points with lending companies you need. In other words, making all of your purchases with cash fails to build your credit history.

Lending institutions prefer lending to people who have had credit before and have kept up with your payments. Therefore, they take a look at your credit report in order to determine that you've dealt with other companies before and you never had problems with them. After confirming this, they are more likely to offer you their credit products.

Paying Routine Bills

The first and simplest way to build credit is by having your name on your utility bills. Your telephone, light, and cable bills could propel your credit, especially if they are always paid on time. Avoid making your payments late because this can be detrimental to your credit rating.

Obtaining a Credit Card

Another way to build credit is to apply for a credit card. Whether it is a department store credit card or a bank credit card, try to get one with minimum pay back. It is also best to find a credit card with a $500 dollar spending limit on it. In this way, it will be reported on your credit report and will help build your credit history. Getting a credit card is not enough, however, as it will do you no good if it remains in your wallet or pocketbook untouched. So, be sure to use it!

Make small purchases with your card, even if you have the cash in hand to pay for what you want. That cash could be used to repay the card after the credit card transaction has gone through.

Usually, for those who have just started to build their credit, the interest rates are high on the cards. But, once you pay your card steadily each month, you can ask for a decrease in your interest rate.

Opening a Bank Account

Opening a bank account and managing it well will also make a good impression on your credit report, especially if your account does not go into overdraft. The more credit you have, the better your chances are with lenders. In fact, if you have good credit, you won't have to go to the bank to ask for a loan - the bank will come to you.

To make sure this happens, try to have at least three different forms of credit going for you. In addition, be sure to keep on top of payments. If necessary, check your balances on the accounts to make sure everything is getting paid on time. After checking your balances, close off all accounts that have been paid off (with the exception of credit cards, of course!).

Pay on Time

The importance of paying your loans and credit cards on time cannot be overstressed. An erratic spending pattern would mean a credit refusal at most financial institution. This can be devastating, as most people need to make life changing investments and purchases at various points in their lives.

Getting a Secured Credit Card

If you are already too deep in debt and your financial picture isn't rosy, you can always consider convincing your financial institution that you want a secured credit card. Secure credit cards offer the flexibility of a prepaid credit card for the first year or so after getting it. With a secure credit card, you get to load a certain amount of money on it ahead of time. As you spend and repay the card monthly, your credit history improves. This makes it more likely for you to receive a traditional credit card in the future.