How to Build your Credit

Because having good credit is so important these days, many individuals are wondering how to get credit for the first time. Getting credit for the first time can be difficult, depending on the actions that you have performed prior to applying for credit. In the world of credit reports and frequently updated credit scores, even small mistakes can have a large impact on your credit history which affects your ability to obtain credit in the future. In fact, many people have already done things that had an impact on their credit history before ever applying for a credit card or a loan. There are things that you can do to improve your chances of getting credit for the first time and following these tips may allow you to obtain a lower interest rate for your credit products as well.

The Importance Of A Good Payment History

When attempting to get credit for the first time, it is important to remember that every payment that you make on accounts has the ability to affect your credit history. Even if you have never applied for credit from a lender or a bank, a credit history is still being created which details some of the choices that you have made. Late or missed payments can have a great impact on your credit history and may stay on your records for as long as seven years. Maintaining a good payment history is very important when getting credit for the first time.

Finding A Co-Signer

Another important tip for getting credit for the first time is to “piggyback” on someone else’s credit until you are able to establish your own credit. This technique works by having a person with established credit and a good credit history co-sign for a loan or a credit card, allowing you to obtain credit to begin establishing your own credit history. The person that co-signs the loan for you should be some one that you can trust and that knows that they can trust you, like a parent, a grandparent, or other close family member.

Obtaining a co-signer to help you obtain a credit card or loan is one of the fastest ways to obtain a credit history, but there are some risks involved with the technique as well. If the person chosen as a co-signer has had credit problems in the past, then they may not be able to help you get a lower interest rate than you would have qualified for on your own. Another danger with this method is the fact that any mistakes that you make when using the credit card, such as missing a payment or paying late, will be reflected in the co-signer’s credit report and may create a reduction in their credit score.

Getting credit for the first time does not have to be a difficult task, but there are a number of different ways that can be used to make the process easier. By remembering that virtually any transaction that you make has the potential to affect your credit score, you will insure that your credit history is positive, which will make it easier for you to get the credit products that you desire.