Establish Good Credit History Immediately
If you have not yet built credit, begin now! Start small. Apply for credit with a local business, such as a department store or bank. They are more likely to have lower credit standards than larger lenders. Before you apply for credit, make sure the credit grantor reports credit history information from either Experian, Equifax, or Trans Union, the three bureaus.
If you decide not to do that, you can also ask a friend or family member to cosign your loan or credit car application or obtain a secured card, which is guaranteed by a deposit you make with the card issuer.
Actively Monitor and Manage Your Credit
While building a solid credit history by paying bills on time is important, you can also take steps to protect your credit standing and make sure your credit report is accurate when you apply for credit.
Many credit reports contain inaccuracies, usually caused by innocent errors but occasionally by fraud (such as identity fraud). The Fair Credit Reporting Act ensures your right to dispute such inaccuracies in your credit report free of charge. To effectively use this right, familiarize yourself with the information contained on your credit report.
You can also create a plan for your credit report, just like you could for a budget, to improve your credit worthiness. Applying for a major credit card if you only have local credit, closing old unused credit accounts, and paying attention to the number of inquiries in your credit report can improve you credit status.
Skip “Credit Repair” Clinics
Some consumers pay credit clinics hundreds of dollars for “credit repair,” hoping to improve their credit. The Federal Trade Commission has investigated and reported on these often-fraudulent “clinics.” Keep in mind: You can fix your credit report for free simply by maintaining good credit and paying your bills on time!
Consumer credit reports contain easy-to-follow instructions for disputing incorrect information for free. Incorrect information will be changed or deleted by the credit reporting agencies. Accurate information that displays negative payment habits will remain on a report for up to 7 years, with bankruptcies up to 10 years. This is mandated by federal law.
