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How do you build good credit?


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Answered 2011-09-12 23:41:53

Good credit is expensive, espesialy if you have bad credit, but bad credit will cost you even more. If you don't have credit start off with something small like a $200 limit credit card or finance something small like a computer. No one will approve you for any more than about $500 unless it is a student loan. Intrest will probably be very high 15-26%, so MAKE YOUR PAYMENTS! It is a good idea not to finance unless you have the cash to pay for it and then over pay the minimum payment. On a credit card use it but pay it off each month, then you won't get hit with the intrest charges. On a loan stretch the payments three to four months so the credit agencies will see the loan. As you build credit this way your credit card will raise your spending limit you will get offers for cheeper interest and higher limits from other credit cards, if you decide to take one get rid of the old credit card, too many credit cards are a temptation that is very hard to resist. Remember if you pay it off each month you pay 0% intrest. this will start building credit

If your credit is bad you already know that some one wants money from you and that they don,t magically disapear. Step 1 call your lenders, collection agencies, ect. and try to work out a payment plan. many companies will wave late fees, stop intrest, and do whatever it takes to get paid. Take advantage of this, some companies won't cooperate though, but you won't know I you don't try. Step 2 pay off, it can seem like a long way out but make a budget and prioritize your bills, here is an example; Car $428 per month, with 31 months left. Credit card $1765 ballance, with a min. payment of $116.39. Weding ring $165 left at $42 per month payments. You have $586.39 in min. payments each month, the ring will be paid off in 4 months freeing up $42, don't get HBO add that $42 to the credit card payment with 22% intrest. As soon as that is payed off use that $158.39 to finnish the car payments early. Clearing up old debt will do an amazing job of building credit. Then stay on top of things, live within your budget and avoid unnessisary debt.

Lenders look at more than a credit score, they look at how much debt you currently have in comparison to your income, payment history, high credit limit and total monthly payments. Be smart and use credit only if you don't have to for every thing except school and a home.

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