After the credit crisis of 2008, a good credit score became more important than ever. Fortunately, even if you have yet to start your credit history, you can probably achieve an good credit score within a year or two. The biggest hurdle is probably getting that first loan, but you can circumvent the normal loan application process if you know someone with an active account.
Starting a Credit History
To start your consumer credit history with the major credit bureaus you must obtain a loan from a creditor that reports to the bureaus. Ask your lender which bureaus he reports to. Most credit cards or other revolving accounts, such as home equity line of credit or installment loan, such as a student loan, should report to the major bureaus.
Benefits
Most people purchase their home with a mortgage and to get one at the best rate you will need a good credit score -- likely north of 740 to get the best rate as of 2011, according to MSN Money. You can also usually obtain utility services, including cable and Internet, and a cellphone without putting down a large deposit or taking an expensive plan.
What Builds a Credit History?
A good credit history includes more than just on-time payments. The credit score calculation looks at how much of the available credit on your revolving accounts you use and if you have more than one type of loan. Your credit score also includes how long you have managed credit and if you have applied for any new accounts recently.
Tips
Apply for a secured credit card. This requires a deposit on the credit limit, but also has the loosest lending requirements. You could cosign on a loan to start building history immediately and bypass the hard inquiry check that dings a score when you apply for a loan on your own. This also means the primary account holder could miss payments -- affecting your score negatively -- and make you liable for the debt. If your bank offers automatic bill pay, use it. Should you acquire multiple credit cards, spread the balance evenly over them instead of putting a large balance on one card.
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