Getting started on building a credit history

Advertising Disclosure

Credit-Land.com is an independent, advertising-supported web site. Credit-Land.com receives compensation from many credit card issuers whose offers appear on our site. Compensation from our advertising partners impacts how and where their products appear on our site, including, for example, the order in which they may appear within review lists. Credit-Land.com has not reviewed all available credit card offers in the marketplace.

Credit Card Applications » Research » Guides » Building Credit History » Getting started on building a credit history

Getting started on building a credit history

By
Add to Favorites:
In the credit driven economy, no financial deal can take place without first validating the credibility of a person. A person`s Credit history does this specific job. Credit history in essence is a record of a person`s financial activities which is well documented for over a period of time. Every major financial decision like buying a home, buying an automobile or even thinking of applying for a loan requires a good credit history. Having no credit history is almost as bad as having a bad credit history, although there is no debt involved. Credit checks have become a mandatory requirement in most places, and even renting an apartment can turn out to be quite difficult without a credit history. Building a credit history takes less effort than it seems. It can be thought of as a multiple step process: Step 1: Applying for a credit card Credit card is pone way through which credit history can be built in no time. Every single purchase using a credit card is well documented and hence will appear on your credit history. Ironically, even a new credit card application will need a credit check. However, many credit card companies offer credit cards to people without a credit history at a higher cost than those with a credit history. Interest rates will be slightly higher and the annual fee will also be to some extent more. However, once the credit card is obtained, and a good record is maintained, the credit limit can be expanded and even the annual fee can be dropped depending on the credit card company. Step 2: Maintaining good credit habits After the credit card is obtained, disciplined spending is very necessary. People, who are new to having credit cards, might need some additional time to understand the workings of credit cards. However, having a monthly budget and sticking to the spending limit helps in regulating the use of credit cards. An upper limit to credit card spending helps in enjoying the benefits of financial freedom, without having to worry about debts later on. Step 3: Understanding the Credit scores It is important to know the basics of how the credit history is scored, to avoid any negatives on the credit history. Every financial activity has a score assigned to it in the credit history. Timely payment of balances, payment of monthly installments for purchases and other small loans, and payment of credit card bills in complete have positive scores for your credit report. Missed payments, utilization of the credit card up to the maximum available limit and exceeding the credit limit, late payment of bills or partial bill payments all have negative effects on your credit history. Every individual gets access to a free copy of detailed credit history every year. Making use of this and reviewing the credit history helps a great deal in achieving good credit scores. Verifying credit scores helps in correcting mistakes related to unauthorized entries, errors in entering the data and other such mistakes that can have negative impact on scores.

Add to Favorites:
Get the latest news, articles and expert advice delivered to your inbox. It's FREE.

Related Research:

Dashlane: Password Management and Shopping Ease in One Simple Product

Dashlane: Password Management and Shopping Ease in One Simple Product

By Angela Rose, Posted: May 3, 2017

Are you terrible at remembering passwords? Are you so terrible, in fact, that you often use the same one for multiple websites? If so, you’re not alone. Continue reading
SoFi Making Lending Social

SoFi Making Lending Social

By Dar Dowling, Posted: April 26, 2017

Since 2011 SoFi, a San Francisco based online lending company, took the lending industry by storm, when they became the first online lender giving people access to affordable student loan refinancing. Continue reading
Affirm: A ‘Friendly’ Credit Alternative

Affirm: A ‘Friendly’ Credit Alternative

By Angela Rose, Posted: April 5, 2017

In 1789, Benjamin Franklin wrote, "In this world nothing can be said to be certain, except death and taxes." His statement holds true even today - especially when it comes to personal finance tools such as credit cards. Continue reading