Resources for Building Credit

A Guide to Building Credit

If you’re getting started in your professional life, or if you have a checkered financial history you’d like to overcome, you’re probably wondering how you can get started building security and potential for your future.  The good news is that you can effect real change in your financial life; the bad news is that it will take time, patience, and commitment.  Let’s consider how to go about it, and why it matters so much.

Why Building Credit Matters

Credit information is gathered on almost all American consumers, and it’s centrally stored so that all lenders and major service institutions have access to it.  If you’re looking to buy a car, a house, or raise capital for a business, a good credit rating is what will allow you to do so.  And the better it gets, the lower your interest rates will be on the loans for which you qualify.

In short, it can be vital to maintaining your standard of living or improving them, not to mention assuring your stability and long-term plans.  Everything you’ll need, including medical coverage and rental accommodations, are dictated in part by the credit score you can achieve.

How to Get Started

The first thing you’ll want to do is know where you are.  The government offers free credit rating services to the public at Annualcreditreport.com, so that’s a good place to start.  If you find faulty information in their database, it’s important to contact the relevant institutions and correct the mistakes before they burden you further.

Once you have an accurate credit rating, you can begin the sometimes long journey towards building it up.  Unfortunately, if you’re not in a position to pay off your current bills – if you’re still in financial free fall – it can be difficult or impossible to improve your rating.  Try reducing your expenses to a level you can meet reliably, and start meeting your payment deadlines as regularly as possible.

The fastest way to get an edge is to sign on to a major credit card company and start spending as much on them as you can pay back dependably.  Put through all purchases on your credit card, and stay on top of the bills as closely as possible.  Remember: every time you miss a payment, or pay late, you’re putting your credit rating in jeopardy.

If you don’t qualify for a credit card as yet, try getting a prepaid card from a respected financial institution.  It will build your credit too, albeit more slowly than the major ones like Visa, Mastercard, Discover, or American Express.  Over time, if you plan correctly, you’ll qualify for a card that will speed up the process.

Conclusion

Building your credit rating is an important step towards financial security and independence, one that should be taken as early and as effectively as you can manage.  The more time and effort you can expend now on making sure you have a solvent financial life, the less trouble you’ll have down the road achieving your goals.