How to build a credit score

Today, establishing a good credit history is very important. You need a good credit history to get a decent rate when you want to buy a home or a car. Your credit history can also determine whether you get a good job, a decent apartment or reasonable rates on insurance. One wrong step like a late payment or maxing out your credit cards can affect you for years.

Here are some tips on how to build credit:

Check your credit report
See what, if anything, lenders are saying about you. This information is contained in your credit report.

Establish checking and savings accounts
Lenders see checking and savings accounts as signs of stability, and also one of the few things you can do to start building a financial history.

Understand the basics of credit scoring
The two most important factors in credit scoring are:
- Whether you pay your bills on time.
- How much of your available credit you actually use.

That’s why it’s important to pay your bills on time, and never max out or even get close to max out any of your credit cards.

“Borrow” someone else’s good credit
The fastest way to establish a credit history is to borrow someone else’s good credit record, either by being added to a credit card as a joint user or by getting someone to co-sign a loan for you. This is exactly how I got my first credit card :)