Est@blishing and Building Good Credit
Feel Free To Add on information and tips or correct any mistakes I may have made.
What is Credit?
Credit is money granted by a creditor or lender to a debtor or borrower(you), who defers payment of the debt. In exchange for the credit, the lender gets back the money, usually paid on a monthly basis, plus interest. The debtor gets the use of the money to pay for and take possession of things today and the creditor gets back more money than s/he loaned out. Modern society is dependent upon credit to generate sales; it enables people to have the things they want and need, but can't afford to pay for right away. By est@blishing good credit, you are seen as a trustworthy consumer who will pay back the money that was "loaned" to them in a timely fashion.
What Exactly Is A Credit Report?
A consumer credit report is a document that contains a factual record of an individual's credit payment history. Credit grantors are permitted by law to review your credit report to objectively determine whether to grant you credit. There are 190 million credit active people in the United States who have a charge account, car loan, student loan, or home mortgage. As those people pay their bills, most lenders report credit payment information to credit bureaus. So most of the information in your consumer credit report comes directly from the companies you do business with.
What Information Does A Credit Report Contain?
A consumer credit report contains four types of information: identifying information, credit information, public record information, and inquiries.
Identifying information includes:
* Your name.
* Your current and previous addresses.
* Your Social Security number.
* Your year of birth.
* Your current and previous employers.
* If you're married, your spouse's name.
* Credit information includes credit accounts or loans
* you have with:
* Credit card issuers.
* Other lenders.
Most information, whether positive or negative, remains on your credit report for 7 years from the date it is first reported, and then cycles off automatically. If there is inaccurate information in your credit report, you have the right to dispute it and have it removed.
Public record information includes any information that's contained in state and county court records, like:
* Tax liens.
* Monetary judgments.
Bankruptcies can remain on your credit report for up to 10 years. Other public record information can remain for up to 7 years.
Inquiries indicate to other credit grantors that you have applied for new credit that could result in additional debt. Potential lenders view multiple recent inquiries on your credit report as a sign that you are overextending yourself. Most inquiries stay on your credit report for up to two years.
(A credit risk score may also be included when your report is provided to a credit grantor, although it is not included on consumer review reports. The ways to calculate and use a credit score vary widely, so a score has little meaning outside of the context of a particular lender's unique guidelines for use. Therefore, it is not included on consumer review reports.)
What Is A Credit Bureau?
A credit bureau or credit reporting agency is in the business of gathering, maintaining, and selling information about consumers' credit histories. It collects information about consumers' payment habits from credit grantors like banks, savings and loans, credit unions, finance companies, and retailers. The credit bureau stores this information in a computer database and sells it to credit grantors in the form of credit reports. When you apply for a new credit card or loan, the credit grantor orders your credit report from at least one credit bureau and analyzes the information to decide whether to grant you credit. The credit bureau charges the credit grantor a fee for every credit report sold.
Although credit reporting agencies provide your credit report to lenders when you apply for credit, they do not make actual lending decisions. It is up to the lender to evaluate your credit report and any other factors they consider important and then decide whether or not to offer you credit.
Tips in Esablishing Good Credit
In order to est@blish good credit, you need a good credit history. But to have a good credit history, you need to est@blish good credit.
In order to build your credit history, it is important to always pay your bills on time and to never borrow or spend more than you can afford. You will damage your credit history by paying bills late or not at all.
If you are a young adult, a college student or a new immigrant, you can begin to est@blish credit in many ways. In fact, you may already be building a credit history. For example, if you own a cellular phone or a pager, you have already begun to build your credit. From here forward, as you continue to pay bills on time and responsibly handle creditors, you will begin to build positive references on your credit report.
If you already have a credit card, you are well on your way to building your credit history. In fact, personal finance expert Gerri Detweiler advises that a major credit card, issued by a bank or other financial institution, that is paid on time over a period of time, is one of the strongest credit references on a credit report. However, a credit card may not be appropriate for everyone. Before obtaining a credit card, you should learn everything you can about your obligations as well as the terms and conditions[..]ociated with using the card.
If you have never borrowed money from a financial institution or made bill payments in your name, then you probably do not have a credit history. Nevertheless, many card issuers offer cards designed specifically for those with little or no credit history. For example, secured cards may be an appropriate first step, or you may consider using a co-signer on your credit card application. Again, it is important to understand as much as you can about the responsible use of any financial tool before applying for and accepting a payment product.
Who May Check My Credit Report?
Federal Law carefully regulates how credit reports can be used and by whom. Individuals have the right to obtain their own reports, and businesses must meet the following requirements before they can access credit information:
* A background Proof of a permissible purpose under federal law
* check and on-site inspection of the business
* A current business license
* A signed contract requiring the business to use the data properly
Information gathered from various websites
|07-30-2005, 11:04 AM||away - #2|
Tips for college students:
Going with a student card is the smartest thing to start with as your first credit card. All the big companies such as Chase, American express, etc. have student cards available to start building credit. These cards have smaller limits, so you wont go crazy buying stuff. They also have lower apr rates to start with, and you can also get free cd's, movie tickets, and other things when u do use credit.
|07-30-2005, 01:29 PM||away - #3|
if u pay your phone bill late...thats a credit slash if u don't know other people can see that and it label u as a delinquent
|08-09-2005, 03:32 AM||away - #4|
thanks for the tips
|08-09-2005, 11:30 AM||away - #5|
Another Tip is that if you run your credit too many times your score begins to get lower and lower, this is because everytime your credit gets ran you loose 10 points.
|08-09-2005, 08:18 PM||away - #6|
^^^^^^^^^^^why? is it wrong to just wanna check your score to know where you stand?
|08-09-2005, 11:01 PM||away - #7|
|08-10-2005, 11:47 AM||away - #8|
|08-10-2005, 01:49 PM||away - #9|
Good read. Props.
|08-18-2005, 06:00 AM||away - #10|
good informational post on credit, props for this
|08-18-2005, 02:19 PM||away - #11|
dont know if this has been posted, but if you have several credit cards and DONT USE THEM, it will help your credit score. having several cards means that you have access to more money than you would with one card. so having a couple cards on the side will help. just dont get too many, because credit companies will get suspicious
|08-31-2005, 12:35 PM||away - #12|
Having several credit cards really doesn't help because the lender is giving you access and seeing that you are not doing using it. No activity is bad activity. You don't gain anything by having them sitting in your wallet.
*A good way to build credit is to apply for a small loan (smaller banks lend smaller amounts of cash easier) and open an account with the same bank. Once you open the account, deposit the money and have it automatically deducted to pay off your loan. You may need an extra 20-30 bucks to pay off the loan at the end, but it will definetly build your credit.
|09-18-2005, 08:37 PM||away - #13|
You should note, that you don't get credit slashes everytime you don't pay your bill. Me, for instance.. I've had my phone cut off several times for a matter of no more than 3 days. Now, if you don't pay your bill for a certain amount of time, THEN you get it added to your credit history.
|09-21-2005, 05:44 PM||away - #14|
Can anyone confirm this? Are Hackers able to fix your credit Report/Score?
|09-21-2005, 09:02 PM||away - #15|
|10-29-2005, 10:03 PM||away - #16|
Get a tight game plan. Think big, long term (where you want to end up, a home,car, job.family, retierment. Be realistic, the bigger the dream the bigger the sacrifice). Then start out small, get and maintain a part time job, go to school and get a student secured credit card. use it to make you money. Use it to buy your school books, utilities, gas, gear (no lavish spending). Be responsible and pay the balance off every month. If you do this the creditors will notice an up you to a unsecured credit card with a higher limit.(your not a baller kid because of this, you still have to be responsible and pay that bill off at the end of the month.) Once again If you continue to pay the bill off every month your credit limit will rise. This work will be most noticable when you finance your first vechicle, you will get a lower intrest rate at a decent credit union. Get a clean dependable ride that will get you to school, work. (don't blow your load,your still not a baller.) Your vechicle loan should be for five years. Payments should be doubled every month to pay it off early ( may not be possible if you are fulltime student. Then compromise less parties allows for more work = more cash.) There is much more to discuss on the topic of credit and how to build it. As for a credit score dont stress out on that right now since your just beginning as long as your paying your bill on time or paying it off every month it will continue to grow. Remember we are the little fish, moreover the more knowledge we gain will allow us to make more financial sound moves which will benefit are future.
|12-17-2005, 05:14 PM||away - #17|
my !!in credit is shot to [rip] already....
|01-04-2006, 01:53 PM||away - #18|
Another good way of building credit is by going to a clothing store and getting one of their credit cards. Buy something with the credit card and then the next day, pay it all off. One of my friends who works at an expensive clothing store told me that works big time. Just make sure you don't spend more than what you got in your pocket.
|01-13-2006, 12:54 PM||away - #19|
A real good way of building credit is if your parents are pretty successful financially get them to put you on their credit card, that doesn't mean have them give you a credit card, but just have them put your name on there.
I had this friend of mine who's step pop did that wit his sisterand he always made huge purchases so by the time she got out on her own her credit was !!in incredible.
yea it's better to build it yourself, but in this day in age it's a chick tryingto get a car when your a first time buyer.
OR, if you do want to build it yourslef like me, go cop you one of t hose credit cards with a 200 dollar limit.
I got mine spent some paid it off, and they keep increasing the limit and my credit score is getting better and better.
|01-18-2006, 09:03 PM||away - #20|
you also have to know how to smartly use your card and manipulate your balance. like if u tryin to make it to payday but u need gas. put that 20 on ya card. that aint ish. you dont have to have a large balance, just always have one that you can EASILY pay off. peace.
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