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Research: Simple guidelines to build credit from scratch -

In today's world with tightened security, it isn't easy to build good credit. It takes time and patience from one's end to build good credit and there are no shortcuts to doing so. Many people assume that a fair credit rating is ok to live with. But it takes a few slip ups for an individual to slip from fair credit and go down further to bad credit. For instance, one simple missed payment could bring the rating down to bad credit within a matter of a few months. One needs a good credit rating for everything, starting from a home loan, a car loan or renting an apartment. The credit bureau keeps track of an individual's credit rating and the FICO scores are equally important.

It is not just banks and financial institutions but even landlords who check their prospective client's repayment capacity before lending/renting out to the individual. In such scenario, the only advice that one should follow is to start early and work on building credit during the last years of college itself.

Some of the ways to build credit from scratch is by following these simple rules listed below:

• First take stock of the credit rating or the credit report from any of the three major bureaus such as Experian, Equifax, or Trans Union. The relevant information could be obtained from the credit report from any of these agencies and this would help one arrive at the actual scenario as to what one's rating is with these bureaus. Typically credit reports are used in order to create credit scores. One has to pay attention to the 3-digit number coding that issuers use to arrive at the creditworthiness of an individual. Lenders, landlords, insurers, employers as well as utility companies - all of them use this as the benchmark.

• Bank accounts (checking as well as savings accounts) are a sign of stability. One has to ensure that a checking or a savings account is opened while still in college and work on it in a responsible manner. If the young adult is under the age of 18 one can open a joint account.

• The basics that one must understand with respect to scoring is that it is of prime importance to pay bills on time (be it utility bills, phone bills etc) and use only around 30% of the allotted credit and one must ensure that one does not max out the card. This would help in getting good scores as well as keeping debt out of bounds.

• The easiest way to build good credit within a short span is to ride piggy bank. Especially for young adults it would make sense to open a joint account with an adult and use their credit rating and in the meantime build one's own credit scores. This would enable one to qualify for loans and open up other options.

• Never apply for credit cards while still in college. Issuers normally set up shop on campus and entice youngsters to avail a card. Experts warn that this could be worst thing for a youngster. Companies are willing to take the risk as they know that the parents would bail out their kids if they get into trouble.