Building Credit… Because it is Your Greatest Asset
Everyone has to start creating a credit record somewhere. Those that got off on the wrong foot and have poor credit need to repair and rebuild. Even if you’ve gone as far as to file for bankruptcy, you have the opportunity to bounce back and rebuild credit…your greatest asset. Here are the best ways to build or rebuild a positive credit record and score:
- Pay everything on time. This includes rent and utilities. Even if these creditors don’t report to the credit agencies, you can give proof of your good record to potential lenders.
- Establish checking and savings accounts with a bank or credit union. Never overdraw these accounts and deposit a regular amount in savings each month, even if it’s small.
- Apply for one or two credit cards. You may need to secure the card(s), but showing that you can buy items on credit and pay for them on time is the pattern you wish to establish. Never charge more than you can pay for in each billing cycle.
- If you purchase something that will take more than a month to pay-off, don’t max out the card. For example, if you have a $1000 limit, buy something that costs $300 or less and pay for it as soon as possible. Potential creditors frown on people who continually stay close to their limits.
- If you’re approved for one or two cards or charge accounts, don’t apply for more. You don’t need a handful to establish good credit, and you may only be tempted to dig yourself into a hole by losing track of how much you’re charging.
All of these tips are pretty much common sense. It’s sad to note however, that many Americans grow up with no clue as to how to handle their financial lives, and credit in particular. Most parents don’t stop to think about how important and valuable education in this area is, and the same goes for schools. Money management should be included in scholastic programs and home education. Until it is, you need to educate yourself and pass along the information to your youngsters if you have them.
If you missed it, here is my last post about Credit Reports...What to Look For.
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