How to Build a Better Credit Record

The first time you applied for a credit card, a car loan, an insurance policy or a personal loan, a credit report was opened under your name and Social Security number. This report contains your employers, addresses you have lived, your debt, how you pay your debt, bankruptcies, judgments and lawsuits in which you have been involved. Potential lenders, landlords, employers and insurers view your credit report. Having a good credit report is therefore an important part of your life. If your credit file needs some improvement to push it into the great category, there are some steps you can take that you may not even be aware of that can impact your score.

Instructions

Number of Accounts

1




Add two or three accounts of revolving and installment credit.

Apply for new credit. Your goal should be two to three revolving accounts such as credit cards and two to three installment accounts such as a car loan, mortgage or personal loan. If you already have these of credit lines, skip to section 2.

2

Make every payment on time with your new credit accounts. Setting your payments up to be automatically withdrawn from your bank account can be very helpful.

3

Refuse to charge more than 20 percent of your credit limit on your new credit cards. If you happen to charge more than 20 percent, pay it down as soon as possible.

4

Charge items to any revolving credit accounts that you have not used recently. Use each credit card at least one time per year.

Reduce Balances or Increase Limits

5




Reduce credit balances or increase credit limits

Plan to reduce the balances on all of your revolving credit card accounts until each balance is less than 20 percent of your credit limit. Reduce the balances as soon as possible.

6

Continue to keep the balance less than 20 percent of your credit limit. If at any point your balance goes above 20 percent, pay it down as soon as possible.

7

Call the creditor and ask for a credit limit increase if you are unable to pay your balance down. By raising the limit, you accomplish the same goal by lowering the percentage of credit line in play.