Establish Good Credit

These steps will help guide you in beginning to establishing credit history:

1. Open a savings and checking account: When you apply for credit most lenders will want to know you have an established active account in good standing, showing you manage your cash flow.

2. Open a credit card: This can be a share secured credit card at the credit union if you have no credit. The credit union will secure an amount in your savings account and then give you credit on your card in that same amount. Make charges and payments on this card as you would any typical credit card and you will start to show a credit history. If you do not want to open a share secured credit card you can also apply for a department store credit card. Department store cards normally have higher rates so you want to be sure to only charge what you can pay off when the bill is due to avoid paying high interest.

3. Stability: Lenders will look at a couple of important factors when you apply for credit. First your Job history, how long have you been employed at the same place, and second your residence, how often does your address change.

4. Co-signer: Adding a co-signer that has established credit is another option when applying for a loan. It is important to note that your cosigner is equally responsible for the payment and credit history will report on their credit report as well as yours.

Once your credit is established it is important to maintain it. Continue to be on time with credit card and loan payments & maintain your checking account always keeping it in good standing. Good credit can help you receive lower loan rates keeping payments comfortable. You will appreciate the work you have done to establish good credit when it comes time to purchase substantial things such as a new vehicle or first home.