aying cash for products and services seems to be a practice that occurred in a different era. Today, credit is a way of life, and plastic has evolved into the currency of choice. Virtually anything-gas, groceries, doctors' visits, clothing, vacations, even cars-can be purchased with credit cards. Yet many consumers are unclear about the best way to go about establishing and maintaining a good credit history.
		reditors are in business to make money and avoid losses. Typically, creditors will analyze the information provided in your credit application and will access a credit report from one or more of the 3 major credit bureaus, Equifax, Experian, or Trans Union. When deciding whether to grant credit or a loan, creditors will consider a number of different factors, such as your income, how long you have lived at your current address, what kinds of assets you have, the balances in your checking and savings accounts, your promptness in paying bills, how long you have been working for the same company, and how much you owe other creditors. All creditors have slightly different criteria, and they will make a judgment about the creditworthiness and potential risk of each applicant.
		here are a number of ways to establish credit. If you have a steady income and have lived in the same area for at least a year, try one of these approaches:
				Apply 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.
				Apply for credit with an oil company or local department store.
				Take out a small loan from a local bank or credit union-even if you have no immediate need for the money. Make payments on time and consider the interest expense an investment in establishing a good credit history.
				Take advantage of secured lines of credit offered by some lenders. By depositing a specific amount into a special account, you receive a credit card with a limit that equals your deposit. (For example, if you deposit $1,000, your credit limit will be $1,000.)
				Before you apply for credit, make sure the creditor or lender reports credit history information to one of the credit bureaus so you can build your credit history.
		lthough creditors have different criteria for granting credit, there are a number of actions which most creditors rank as indicative of a poor credit risk, including:
				Frequent late payments
				Unpaid bills
				Repossessions
				Accounts turned over to a collection agency
				Legal judgments
				Liens
				Bankruptcies
		Paying your bills on time is the best way to maintain a good credit rating and be considered a good credit risk. However, there are a number of legitimate circumstances which can cause you to become behind in your payments, such as illness, injury, or the loss of your job.
		f you begin to fall behind in your payments, contact your creditors immediately. Most are willing to work out an alternative payment schedule with you if you expect to repay your loan or balance within a reasonable period of time. Creditors and lenders want to collect their money at the least possible cost. By working with you before the situation becomes critical, they can save time and money on collection efforts, and they know up front when to expect payment.
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