Credit History: Create, Maintain, Re-establish

Whether you’re seeking to create, maintain, or re-establish your credit record, the path to success is the same. Here are some tips to help you get on track and stay there.

1. Pay your bills on time. Get back to basics—it’s one of the easiest ways to improve your credit history. Even if you don’t have a credit history yet, you can begin to establish a positive record by paying all your bills on time, every time. 

2. Don’t bounce checks. Not only are bounced checks a waste of money, in the form of overdraft fees, they cause late payments and late fees as well, which can be reported to the credit bureaus. Balancing your checkbook when you receive your monthly statements can save you a lot of money and worry. Better yet, online banking makes it even easier to keep track of how much is in your account. Remember to keep ATM receipts so you can subtract withdrawals from your balance everyday. 

3. Contact your lenders immediately if you anticipate any problems with your payments. It’s better to communicate and work out an acceptable payment plan than to ignore it. It will only get worse. 

4. When borrowing money, more isn’t better. Before signing, make sure you know what your monthly payment will be. Evaluate whether or not the new payment is possible in your budget. Don’t let anyone talk you into borrowing more money than you can afford.
5. Think twice about co-signing or guaranteeing loans for others. Although you may want to help out a friend or family member, you may end up responsible for repayment. Assume you will be covering the payments, so the next question is, “can you afford it?” 

6. Avoid excess inquiries into your credit report. Too many inquiries can negatively affect your credit report. When shopping for a car, for example, the dealer may want to check with more than one bank regarding the loan. Ask how many inquiries will result from the check. 

7. Regularly review your credit report. Consumers can request a free copy of their credit report from all three credit bureaus once a year. Review it for accuracy. If not, begin the process of correcting it. If you know you’ll be applying for a loan, review your report at least three months beforehand.