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Building or Re-Building Your Credit History

Establishing a Good Credit Rating

In order to be in a position to enjoy all the best credit card offers from the various issuers, you must build an excellent credit history. It is true that the ability to build an excellent credit history may depend at least partially on personal circumstances. The following are some tips you can follow if you are looking to improve your credit score:

Secured Credit Cards:

Apply for a secured credit card. A secured credit card will help to establish your credit worthiness. These cards are referred to as secured simply because your credit card limit will be completely secured by the amount deposited in an account with the creditor.

If you choose to deposit an amount of $1000 in cash.. the limit on your credit card will be $1000. With your credit limit, being secured by this savings account, the creditor is assured that you cannot default on your obligation to repay your debt. The activity on your credit card will be reported on a monthly basis to the three major credit bureaus. This will aid in the building or rebuilding of your credit score.

Piggybacking:

Piggybacking on another person’s good credit is a common practice nowadays. It is a technique whereby an individual with a good credit score assists in boosting the credit score of someone with no credit or those who need to improve on their credit score. This is done by making them an authorized user on one or more of their credit accounts, for which a good credit history has already been established.

This technique is mostly used by parents to assist their children in building credit. This means that their children may start building good credit scores while they are young and by the time they are ready to go out in the world and make a purchase on their own.. such as a car or their first home.. their credit score will be satisfactory enough to give them many good opportunities in the credit market.

Retail Credit Cards:

The only advantage with these cards is that you can normally obtain them very easily. It is worth it to note, however, that retail credit cards carry excessive interest rates and most times have very low credit limits. Ensure that you choose a retail credit card carefully.

Many retail credit cards are actually issued by one of the major banks on behalf of the merchant, as the merchant may not care to have the responsibility and expense of running their own credit department.

If you have one of these retail credit cards that has been issued by a major bank, and have been staying within your credit limit and making on-time payments for a period of time, the issuing bank may very well send you an application to apply for one of their Visa or Mastercard credit cards.

Try to keep the rate of card utilization as low as possible and be prepared to pay your bill in full each month. If you adhere to these terms, applying for a retail credit card may be the best option to build your credit history.

Since lenders will look at your credit history before issuing you any credit.. it is very important to establish and maintain a good credit standing.

Most importantly.. you should try to establish your credit history while you are young. Then, by the time you are ready to purchase your first car or your first home you will have a good credit history and will be able to qualify for your loans.


Article Courtesy of: CreditCardApprovalCenter.com


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