Step 3: Carefully Opening New Accounts

The reason to have good credit is so that you can get the loans that you need.  Because credit is such a powerful tool, you need to know how to carefully use it to your advantage.  Here are some steps:

1. Try not to apply for any loans or credit accounts for 90 days before applying for a home loan.  Every time you apply for a loan, a credit card, a cell phone or even to rent an apartment you give that company permission to check your credit report.  Those "Inquiries" show up on your credit report and can affect your scores.  Inquiries only stay on your credit report for 90 days.
2. If you apply for a car loan, make sure that the payment is very easy for you to make.  Large car payments can disqualify you for a home loan because you may not be able to afford the additional monthly expense of a house payment.  Your house increases in value over time and your car loses its value, so try not to buy an expensive car until after you own a home.
3. Open a secured Visa account with Altura Credit Union.  Anyone can get this type of credit account to build their credit.  You'll have to put some money into a savings account first as collateral.  Visit http://www.alturacu.com/ or call 951.571.5014 to start this process.  When you get your card, follow the advice below on how to use it.  You may be able to convert this card to a regular credit card after twelve months.
4. Watch out for credit card offers.  You DO want to open some credit card accounts; the more credit you have available and unused, the higher your scores.  You do NOT want to carry around a credit card and run up a large balance.  Hide the card somewhere safe in your home.  Take it out once a month and fill your gas tank, then pay it off in full when the bill comes.  Read the fine print before accepting their offer.  Accept a card with small annual fees ONLY if you're not getting any better offers for free accounts.