Establishing & Maintaining a Favorable Credit History

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When you have little or no credit history, applying for loans and credit can be difficult, if not impossible. Lenders like to see a history or pattern as well as a credit score before they extend credit or loans and it helps them decide what interest rate to offer. If you do not have a credit history, here are some ways to build it one:

• First and foremost, pay all your bills on time. This will establish a favorable pattern of repayment that can go a long way to help prove your credit worthiness.
  
  
• If you have not done so, open a savings and a checking account in your name. Over time, your deposits and withdrawal will prove your ability to handle money, especially if you live within your means, i.e. don’t overdraw your account.
  
  
• You can obtain a low-interest, no annual fee credit card for small purchases, and pay off the entire balance each month. Remember, if you cannot pay off the balance each month, you are spending outside your means.
  
  
• You can take out a loan through your bank or other reputable lender, but remember that you not only have to pay it back but also with interest, which is often higher for those with poor credit scores or none at all.
  
  
• Keep in mind that a lender or creditor may say you are approved for a particular amount, but that does not mean you have the resources to repay it quickly. Borrow only what you can afford to repay quickly.

In time and with patience, you can build a favorable credit history.

Just as important as building a good credit score is maintaining that credit score by doing the following:

• Check your credit report frequently for errors. You can read more about that in Assessing Your Credit Report.
  
  
• Guard your account and PIN numbers very carefully.
  
  
• Keep a watchful eye on all your bills and statements. Report/dispute charges immediately.
  
  
• Protect all identifying information, and protect your mail from theft.

By keeping a watchful eye on your credit report and living within your means, you can ensure that your credit history is favorable and your credit score high.

Helpful Resources

• Your Credit Rights
• Choosing and Using Credit Cards
• Getting Credit: What You Need to Know About Your Credit
• How to Establish, Use, and Protect Your Credit

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