How To Establish Good Credit
Maybe you recently turned 18, and can't wait to learn how to establish good credit. Perhaps you're in your 30s and want to actually practice how to establish good credit because you recently divorced your gold-digging ex-wife. No matter what your reasons for wanting to establish good credit, you can eventually build a great credit rating and enjoy bettered borrowing power and perhaps even a job in the financial industry if you are so qualified!
- Get a credit card if you don't already have one. A bank debit card does not count. However, banks and credit unions often offer "secured" credit cards which work just like their counterparts. As you work toward how to establish good credit, the lender keeps collateral on hand such as a certificate of deposit. You can't use the collateral (even if it is instead a savings account) to pay your bills; the lender holds onto it just in case you don't pay the bill on time.
- Paying all of your bills on time is crucial toward practicing how to establish good credit. Did you know that your former cell phone providers, doctors, and utility companies can ruin your mission of how to establish good credit if you don't pay them on time? Virtually any unpaid bill can be submitted to a collection agency, who will typically place a "black mark" on your formerly good credit for up to seven years.
- Keep your account balances as low as possible. Future lenders like it when you don't look "maxed out" on your existing debts; if your credit card balances are close to the limit this gives the appearance that you might be in financial trouble. As you work on how to establish good credit, a good rule of thumb is to keep your credit card balances to less than 30 percent of the available credit limit. So, keep the balance of that $500 card to about $150 or less.