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Establish A Good Credit History

Ok, so you know you need to establish good credit. How do you do that? What if you have never requested or received a loan or financing? One way of establishing credit is to apply for credit from a local department store. Ask them if they report to a credit bureau and if they do, this would be an excellent way to make small purchases and then repay the entire amount, on time, each billing cycle. This will establish a good credit history.

Another way to establish a good credit history is through the use of a secured credit card. This method requires that you open a bank account and maintain it with a modest deposit that will set the spending limit on the account. Usually the limit on this kind of account is a percentage of what you have on deposit with the financial institution. There may be application and processing fees associated with secured accounts, as well as rather steep interest rates. For this reason it is even more imperative that the account be paid in full each month rather than carrying the balance forward.

A less favorable way of establishing yourself as credit worthy, is to ask someone with a good credit history - like a relative, to co-sign an account with you. If you don't qualify on your own a co-signer assumes the risk the financial institution would have taken on. The co-signer essentially promises to pay your debts if you don't fulfill your obligations. If you pay any incurred debt promptly and in full you will soon build good credit and be able to qualify for credit on your own.

Having good credit is an asset in receiving lower insurance rates, interest rates on loans, job promotions or any number of situations where your credit history is used to evaluate you.

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