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In this day and age, paying cash definitely seems to be a
practice that occurred in a different era. Today, credit is
a way of life, and plastic has evolved into the currency of
choice. Consumer debt in the U.S. now exceeds $2 trillion. It almost doubled from 2000-2005. No wonder n 2005 we had bankruptcy reform.
Your credit can determine what kind of car you drive, what
neighborhood you live in, and in some cases, whether or not
you get the job you want. With so much riding on your ability
to manage debt and pay bills on time, it's important to learn
as much as possible about how to establish and maintain good
credit.
How to Establish Credit
There are several ways to establish your credit. Here are
some approaches that should help get you started:
- Put your apartment and utilities in your own name.
This will establish a regular payment history under your
own name and social security number.
- Apply for credit with a local business. Department
stores and oil companies often have lower criteria for giving
credit.
- Take out a small loan. Even if you don't need
the money, borrowing from a local bank or credit union and
making timely payments is a good way to establish your credit.
- Apply for a secured credit card. Available at local
banks, your credit limit is equal to the amount you deposit
into an account. If you deposit $500, then your credit limit
is $500.
- Report credit history information. Make sure all
of your creditors or lenders report your information to
one of the large credit bureaus so you can build your credit
history.
Maintain a Good Credit Rating
Maintaining a good credit rating isn't difficult but it's
important and should be taken seriously. Since credit information
will follow you for seven years, make it positive so it won't
negatively impact your future credit needs.
- Pay your bills on time. This is the best way to
keep a strong credit rating and be considered a good credit
risk by your future lenders.
- Talk to your creditors. You should contact your
creditor immediately if you fall behind in your payments.
Most are willing to set up alternative payment options,
especially if you inform them right away of your situation.
- Review your credit report. It's best to review
your report annually--that way you can catch and correct
any errors or negative information right away. You can also
order a report combining information from all three major
credit agencies:
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Build
Your Credit
