10 Steps to Building Good Credit History

By Andrew Gorton

Thinking of buying a new car? Maybe the time has come to become a home owner? Or maybe it’s as simple as wanting to rent an apartment or buy insurance. All of these situations will require your credit report to determine if you qualify for the loan, to decide if you are good enough to be a tenant, or to decide your insurance rates. That’s why these 10 steps to building good credit history are really important.

If you are sitting with a good credit history good for you but many are trying to repair or build a credit history which can feel like a real overwhelming task. Relax lots of people have been in your shoes and came out on top with excellent credit. Of course it’s not easy and you’ll have to work at it but by taking these 10 steps to building good credit history you will be on the right track in no time.

You need to start by doing a budget and then you need to live by it. No exceptions. You need to know what you are spending and where you are spending it.

Your budget needs to be realistic including all your basic expenses and then if there is money left over you can a lot some of it for extras. No just this one time so you can go out with friends. No but “I got to have it.” You should always try to bank at least 10% of your take home pay. When you plan your budget you will be able to see exactly where you can save.

If you do not already have a checking account you need to open one now. Financial institutes that are considering giving you credit want to know that you have a relationship with a financial institute and that you have an account available for paying bills. Don’t let your checking account sit overdrawn as it can affect your credit record negatively.

Always pay your current bills on time. These are bills like your telephone bill, utility bill, insurance, even your rent. If you are late or miss a payment it will go against your credit rating.

You should check your credit report at least annually. These days identity theft up checking it every 6 months wouldn’t hurt and with such ease of access online and a minimal cost there’s no reason why you can’t. Agencies like Equifax or Experian in the UK can provide you with your credit report. If you don’t do it online they will send you a copy via the mail.

Even credit bureaus are subject to making errors so you should review your credit report carefully and have any errors you find fixed by contacting the credit reporting agency and the creditor in writing. Check to make sure that anything that should have fallen off has. Items like bankruptcy, delinquencies, IVAs, CCJs, and liens do appear but they also fall off eventually.

If you’ve never had a credit card or you need to rebuild your credit history you should consider a secured credit card. How these cards work is you deposit funds with the credit card issuer and generally the card is issued for that amount. Making timely payments on this card is reflected on your credit report and helps to build your credit.

You can also apply for department store and gas cards which are easier to get then some of the major cards. Ask for small amounts because then it is easier to get.

You should never max out your credit cards because it is reflected on your credit report and actually hurts your credit score but reducing your point count. You should have no more than 25% of your credit limit used at any one time. One of the calculations is how much credit you have available to you and how much of your credit you have used. The more you are using the bigger the hit on your credit.

If you are running into trouble with making your payments don’t wait until the accounts are in the hands of debt collectors. Instead contact the creditor and make payment arrangements. If you fee you are over your head contact a debt counselor for assistance.

That’s it – these 10 steps to building good credit history should have you shining if you follow them.

Andrew Gorton is the founder of Fresh Finance, who provide Debt Consolidation to UK residents.

Article Source: http://EzineArticles.com/?expert=Andrew_Gorton
http://EzineArticles.com/?10-Steps-to-Building-Good-Credit-History&id=430055