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Establishing Good Credit
In order to qualify for a good home loan you will need to prove to the lender that you are a good risk – and they do check credit. The best way to prove this and survive outside credit monitoring is to pay your bills on time and keep your debt under control. Following the steps below will help set you on the right path.
Open a Checking Account
Make sure you keep track of your balances and do not overdraw and bounce checks.
Record All Transactions
Record every check, deposit and withdrawal in your checkbook register. Compare the register to your bank statement frequently. The more often you balance your checkbook, the less likely you will be to bounce a check.
Apply for a Credit Card
Ask your bank about opening a consumer credit account. Carefully review and check credit terms. Make sure the bank will report your performance to a credit bureau so you can begin to build a consumer credit history. If you cannot get a regular credit card, ask about a secured credit card, or apply for a department store card. A secured credit card is a card that requires you to put money forward to guarantee payment. For example, if you put $500 towards a secured credit card, you will get a card with a $500 limit that you can use like any other credit card. The bank holds the $500 deposit in case you do not make your payments. If you cannot get a secured credit card, try to have a family member with good consumer credit co-sign on a card or a loan. Be careful with this – if you default on your payments, it will not only reflect badly on your hard copy or online credit report, but your co-signers online credit report as well.
Pay Your Bills on Time
Make sure you pay your rent, utility and insurance bills on time every month. Every late payment is a bad mark on your credit. Don't charge more than you can afford. Try to pay off the balance every month, especially if you have a department store card. If you must use more than one credit card, keep both cards well below their limits. Check credit offers from your bank, especially if they have online bill payment. This is usually a far more reliable way to pay your bills and will keep you from having late payments because the check got lost in the mail. As the credit usage or payment history accumulates, your online credit report and credit score should improve over time, assuming you make payments on time and keep your balances low.
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Did you know?
 Lenders consider more than just your credit score when deciding whether or not to extend credit. They consider the amount of debt you can handle given your income, your employment history, your credit history, as well as staying within their institutional underwriting policies.
Find out more information about your credit,
click here.
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