How to Start Good Credit

Credit is the ability to acquire goods and services with an agreement to pay at a later date. Credit can make your life easier by providing the immediate benefit of goods and services with easy payment terms. You can use credit for the rest of your life, which is why it is a good idea to start building good credit at an early stage.

Instructions

1

Open a bank account. Bank accounts are not typically part of your credit score, but your account history can be a vital component when lenders consider giving you a credit card or loan for the first time. They can use this information to determine whether you are a good credit risk. Active bank accounts in good standing prove that you can manage money.

2

Open a department store or gas station credit card. For many people, these types of credit cards are the easiest ones to open. Signing up for one can help you start a good credit record. Use the credit card to purchase some items and pay the monthly dues religiously. The purpose of opening the account is to establish a credit history and credit score. Call the department store and make sure that it reports regularly to the credit bureaus so that your credit report can be updated to show the credit history.

3

Sign up for utilities under your name. Having an electric or gas bill, telephone, water service, or cable under your name won't establish a credit score, but it can help first-time borrowers to get approved for credit.

4

Open a secured credit card. This type of credit card requires you to deposit a certain amount in the issuing bank. The amount of your deposit is held as security to cover your credit and also serves as your credit limit. It is a great option for establishing good credit especially when other options are not available. Make sure that the bank reports your credit transactions to credit bureaus in order to establish your credit history.

5

Get a job. Lenders definitely would like to see how much income you are earning and how long you have been working. Your ability to hold a steady job can improve the likelihood of getting approved for credit.

6

Show a stable residence history. Lenders will also check to see how often you move and whether you rent or own. As with employment history, it is better to have a stable residence. Owning a home, even if just jointly, will be counted as well.