Credit Basics
Credit Reporting &
Scoring
Credit, Information &
Privacy
Credit & Debit Cards
Mortgages & Home
Equity Loans
Debt Management
FreeCreditReport
Rate Your Credit
Test Your Credit IQ
Ask The Expert
|
| |
| How Can I Establish--or Rebuild--Good Credit |
 |
If you do not have a well-established credit history, you should begin
to build one.
The trick is to start small: try applying for credit with a local business,
such as a department store or a local bank or credit union. These local
merchants may have lower credit standards than larger lenders. Before
you apply for credit, make sure the credit grantor reports credit history
information to one of the major U.S. credit bureaus so you can build your
history.
Other options if you are having difficulty opening a credit account include
asking a friend or family member to cosign your loan or credit card
application or obtaining a secured card, which is guaranteed by a
deposit you make with the card issuer.
Actively Monitor and Manage Your Credit
While the most obvious thing you can do to build a solid credit history
is to pay your bills on time, 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, in which a
thief uses someone else's name to open credit accounts). The Fair Credit
Reporting Act ensures your right to dispute such inaccuracies in your
credit report without charge. (For information about how to do this, see
our Dispute Information.)
To effectively use this right, you need to be aware of what information appears on your credit report. One easy and inexpensive way to do this is by ordering a copy of your credit report online from CreditCheck Monitoring Service.
You can also plan a credit strategy much like you would a budget to
improve your credit worthiness. Taking steps like applying for a major
credit card if you only have local credit, closing old unused credit
accounts, and keeping tabs on the number of inquiries in your report can
improve your credit status. See our tips on Handling Your
Credit to
Prepare for the Future for details.
Skip the "Credit Repair" Clinics
Although some consumers pay credit clinics hundreds or even thousands
of dollars to "fix" their credit reports, only time can improve bad
credit. The Federal Trade Commission has investigated and reported
at length on these often-fraudulent "clinics." And some credit repair
plans actually encourage you to commit fraud yourself by attempting to
create a second credit identity.
The key fact: There is nothing a credit repair clinic can legally do to
fix a credit report that you can't do yourself for free.
Consumer credit reports contain easy-to-follow instructions for disputing
inaccurate information at no charge. Inaccurate information will be
changed or deleted. Accurate information that shows negative payment
habits will usually remain on a credit report for seven years, with
bankruptcies remaining up to 10 years. Federal law mandates this.
|
|
 |
|
