Criteria for Establishing Credit History

You need a credit history to qualify for good jobs, credit cards, loans, apartment rentals, cell phone contracts, utility hookups and many other life essentials. You must use credit to build up that history, which is tricky because it means getting lenders to take a chance on you without a proven track record. Companies, employers and credit scorers focus most strongly on certain criteria, so you should do the same to build your history efficiently.

Credit Score Factors

Major credit scorer Fair Isaac Corp. explains on its MyFICO website that your score comes from very specific criteria. Payment dates are 35 percent of the score, while debt loan is 30 percent. The time you have used credit is 15 percent, while new accounts and variety of account types each make up 10 percent of your score. Pay the most attention to the first two factors when establishing your credit history, since they account for a total of 65 percent of your total score.

Other Factors

The Federal Reserve Bank of San Francisco advises that lenders scrutinize your personal finances when you are trying to get accounts to establish your credit history. They look favorably on a lengthy job history and good income when compared to your rent, utilities and other obligations. They also see bank accounts and large assets like a home or property as positive factors.

Initial Accounts

You have several options for opening your initial accounts to start your history. The Federal Reserve Bank of San Francisco explains that department stores, retail chains and gasoline companies give credit more easily than major banks that issue Visa, MasterCard, American Express and Discover accounts. Their criteria might simply include an established residence, steady income and bank account. Secured credit cards are also good for building up a history because their main criteria is the ability to put up a security deposit of as little as $300. The credit limit matches your deposit and guarantees repayment.

Credit Types

Your credit history needs a mix of different account types to look its best. MyFICO explains that lenders look for a balance between installment loans with fixed payments and revolving accounts with credit lines and variable payments. Meet this criteria by taking out a small personal loan with a short repayment term if you only have credit cards. You may also meet the criteria for a car loan, even if your credit history is limited, because the vehicle is collateral so the lender takes less risk.