Credit Report 101 – A Simple Guide to Building your Score

Your credit history plays an important role in your life. In most cases, it determines if you can land on a good job or get reasonable insurance rates. For those who are still starting out, knowing the right way to build a credit history is very important. There are things that you need to do.

  1. Examine your credit report – In creating the credit score of a person, credit reports are used. Lenders typically use this to determine the creditworthiness of a loan applicant, although for people with bad credit that need a little more help with this, there are sites that offer loans even with low credit scores which work perfect for these cases. You can obtain a free annual check at your reports. If in case there are errors in your credit report, you should clean it up before applying for any new accounts.
  2. Set up savings and checking accounts. Lenders consider bank accounts as indication of a person’s stability.
  3. Learn the basics of credit scoring. There are different factors which determine your score. They include:
  • Payment history
  • Amount borrowed
  • Length of credit score
  • Type of credit used
  • New credit

There are some tips to help you become a good credit.

  • Have an automatic reminder or payments system to avoid making late payments
  • Keep credit less than 30 percent of your credit limits.
  • Pay bills monthly in full
  1. ‘Borrow’ another’s record. This means being added to a credit card as a joint account holder or by finding someone to co-sign a loan for you. But first you have to check the record of that person before borrowing.
  2. Apply for a credit card that is secured. Apply for one that has lower annual fees and no application charges. After a year and a half of timely payments, convert into an unsecured credit card. You shoul