Knowing Your Credit History

You know your medical history. Why not your credit history? It's what financial institutions look at when making decisions about giving you credit. Knowing your credit history gives you a big advantage whether you're looking for a loan, a job, a house or a car. If your credit history is good, you may be able to negotiate better interest rates. If your credit history is poor, you'll need to pull up your low credit scores before big purchases or else face daunting interest rates.

Knowing and Understanding Your Credit History

First, know what you're dealing with. A cheap way to obtain your credit score is to look for a free credit report online deal that includes scores.

Correct all errors on your credit report. Your report must prove to the lender that he will get his money back.

If turned down for credit, get a free copy of your report to find out why.

To establish credit, piggyback onto someone who already has good credit and is willing to "co-sign" for you. (Remember that if you default, their credit suffers.)

When co-signing, make payments on or before the due date. Do not pay in full until the bill actually arrives since this completes the billing cycle and establishes 'pays on time' on your report.

Ask the co-signer to repeat the generosity (if needed). Then create a debt, wait until the first bill comes, and pay it off in full. Keep repeating until you no longer need the co-signer.

Another method to create history is to locate a financial group who offers a 'secured credit card.' With this option you deposit money into a savings account. Your credit limit then equals your savings.

Using the secured credit, create a debt on the new card; wait until the first bill comes; pay the bill off in full or make payments; repeat until you can establish unsecured credit.

Some retail and gasoline credit cards are not revolving (do not carry a monthly balance) and sometimes are easier to obtain than regular cards. Over time they can help establish history.

Other Tips

Eliminate the need for the co-signer or secured card savings as soon as possible.

To maximize your credit score, maintain your credit balance below 30% of your maximum.