Step 2: Keeping the Accounts You Have

If you already have credit, the best thing you can do is to care for the car loans, credit cards, home loans and other accounts you already have.  Here are some steps to properly maintaining the accounts that you already have:

1. Make every payment on time.  This is the most important thing to do if you want good credit.  Your credit score will become worse if the payment was more than 30 days late or if it was recently late.  Paying accounts on time will create a good payment history and show that you're on your feet.  Plus you'll avoid fees from being past due or over your limit.
2. Pay your credit cards down.  If you have credit that is available to you but unused, it shows responsibility and helps your scores.  The higher the limit and the lower the balance, the better.
3. Keep your accounts open.  The longer you have credit accounts, the better your scores.  If you accidentally closed an old account, you may be able to call them and ask them to re-open the same account.  Closing your lines of credit can also hurt your scores because it looks like you're using all the credit you have available.

If you don't have credit scores, you can build what is called "Alternative Credit" based on what you do with your money now.  There are some loan programs that can use Alternative Credit to help people without credit scores.

1. Make sure the account is in your name when you pay rent, car payments, car insurance, phone, cable and other bills.  Have at least 4 accounts in your name.
2. Gather 12 months worth of statements and canceled checks to show that you pay these accounts yourself and on time.
3. Set a regular amount of money in your savings account...as much as you can.  If you put $200/month in savings for 12 months, this shows that you can handle a $200/month responsibility.  Plus, it will help you pay for closing costs, a down payment, or an emergency expense that you would otherwise put on your credit card.