Establishing a Credit History

To get a good credit score first you must establish your credit history by getting a loan or a line of credit. Banks and credit unions are a good source for getting a credit card which then allows the user to securely borrow money when you need it by using the card and then repay the card's debt at a later date.

• A good credit score lets you qualify for a good rate of interest on your mortgage, car loan and other big purchases. A bad score like a 420 will make it very difficult to qualify for a loan. No one wants to loan money to someone who doesn't pay it back.

• Use your credit card for at least a month so that your credit is established.

• Credit cards report your information to the major credit bureaus on a monthly basis.

• It is important to make on time payments and keep reasonable credit usage for the first six months.

• Make sure you use less than 30% of your spending limit.

• You can get higher credit limit down the road if you are responsible and pay back money you owe on time.

• Credit scores run from 300 to 850. A score of 720 and above is excellent and anything below 620 is considered bad.

• You must pay back your credit card on time to make sure you have good payment history and another reminder never max out your credit card.