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Research: Building a Good Credit History from a Bad One -

Credit history, as we all know by now is the record of person or a company's borrowing, repaying capacity. It is also an indicator of late payment records or bankruptcy. The credit history of a person is built over a period of time, and the credit worthiness of an individual or a company is directly dependent on the credit history of the concerned party.

The credit bureau maintains the credit score of the user and other lenders can obtain this data before deciding on giving credit to the applicant. If a person has a bad credit history, it generally indicates that the individual's repaying capacity is not good and when there are balances carried forward and there are late payment issues, it directly has an impact on the credit score.

These days everything is linked to a good credit history and hence it is vital for people to work on their bad credit history and make the necessary changes. Here are a few tips that one could follow:

  • Check on the credit report. These can be obtained from any of the major agencies such as Equifax, Trans Union or Experian. These bureaus maintain the credit report of each individual or company. One is entitled to get a free annual report regarding the same.
  • Open a savings or a checking account. This could be the first step to building good banking practices and eliminating bad credit history.
  • Use the credit available. Don't use more than 30% of the available credit at any given point in time. Pay bills on time. Don't carry forward monthly dues.
  • If you can afford a co-signer, then open a joint account with the person and make use of their good credit rating. This would mean piggy backing on someone else's credit. However, one must ensure that both parties maintain good credit rating otherwise instead of the benefits the whole process might turn out to be risky for both parties.
  • Apply for a credit card while still in college. Although, college going crowd is warned to stay off limits from these booths, it is wise to apply for a card while still young but the bottom line is to use the card wisely and pay up the monthly dues and not carry them forward. By adapting these simple techniques one can easily work to build good credit history from an early stage.