Build Good Credit
If you have just turned 18 and would like to establish credit or if you have had bad credit in the past and would like to improve your credit history and credit score, you will need to build good credit. It is important to note that you must build good credit slowly. All banks and credit bureaus look at your long term financial history to determine your risk and ultimately your credit score. Here are some tips on building good credit.
One of the ways that you can build or establish credit is to take out a small loan, credit card or purchase a car. The first time you apply for any kind of loan, the bank will review your credit history. If there is no credit history, it will approve a loan only if you have a co signer. A cosigner is another adult with an established credit history that is held responsible if you do not pay your debt.
Once you have established a credit history, you can look to build your credit history. There are many ways you can build your credit history. The important thing to remember is to not apply for every credit card offer or loan you see. Choose wisely, if a bank or lending institution sees that you have applied for a dozen offers and were rejected for all of them, they will determine you a big risk. Usually you can start small such as a secured credit card or store credit card. This way you can borrow a few hundred dollars or a couple of thousand dollars at a time and pay it off relatively quickly.
While there is no exact formula, if a lender sees that you have been extremely responsible and very stable with your financial habits, they are more likely to approve you for a loan. Usually it can take a few years to have enough history to determine whether you are responsible or not.
If you are looking to build good credit, be patient and responsible. During the course of a few years, you will notice that more and more lending institutions will approve you for loans. If you have kept up with all your payments, have not taken on large amounts of debt and have not requested numerous credit cards, for the most part, you will have an average or above average credit score.
