Building A Credit History

It takes years to build your credit history. There is no quick fix or short cuts to building a credit history. Lenders are looking for consistency and a verifiable credit history of timely payments to prove your creditworthiness.

Everyone has to start somewhere. You never know when the need for a loan will arise. Also as young adults start to become financially responsible they begin to understand the need to build credit history in order to gain financial independence. Anyone who has had financial trouble and has a history of late payments or has filed bankruptcy will need to rebuild their credit profile again as well.

There are several ways to start the process to build your credit. One option for those trying to establish a credit history is to obtain a secured credit card. You can obtain a secured card for as little as $200.00. The credit issuer will hold the funds in your account as collateral against your credit limit. This allows you to start a record of account payment performance. Once you have shown you pay your obligations in a timely manner, you will soon be able to apply for and obtain credit that is unsecured.

You can also begin to establish credit by using a co-signer on your first few credit accounts. The co-signer is also financially responsible for the credit line. It is a big responsibility for a co-signer to take a risk with their credit rating, if you don’t pay, they are responsible and it will affect their credit rating.

Your payment history alone accounts for 35% of your credit score. The length of credit history accounts for 15%. So paying your bills, all of your bills, including rent, utilities, credit card and car loans on time is the best way to build a great credit history.

Building a credit history is managed over a long period of time. Remember paying your credit obligations on time and maintaining a long history of timely payments is the key to establishing an excellent credit history and high credit scores.