How to Establish a Positive Credit History
Learning how to establish a positive credit history is important, especially for those who have needed to file bankruptcy or have gone through a series of difficult times in the past due to accumulated school debt or other reasons. While you won't be able to go out and buy a brand new car immediately after filing for bankruptcy, there are other things you can do to start rebuilding your credit right away. If you follow them, then it won't be very long before you can apply for an unsecured credit card and have the application approved. It starts by using some conventional methods such as a secured card. These may have an annual fee attached to them but they do give you the ability to start making purchases online or with those companies that only accept credit cards, such as reservations with hotels. If you make these online or over the phone, you need to give them a credit card number.
Make Payments Early if Possible
Another thing you can do is to start paying early or on-time with your financial obligations. As long as you keep this credit history up, they are required to report this to the credit bureaus most of the time. The first step in this process is to talk to your financial institution as well. This is a great time to deposit a sum of money with them and then apply for a loan with the same amount. Once the paperwork goes through and they see that you actually have those funds on hand, this will be a positive mark on your credit report. By turning around and paying that loan off the next month, you will just have established a reference point for other companies to use when they evaluate your credit worthiness. You could also follow a plan to make the loan payments using that same balance already deposited with the bank. That would turn this credit reporting session into a revolving account of sorts for credit card companies to view.
Proper Use of Credit Limits
Remember that you should not go out and use every cent of the credit you have been extended. Most of the time, you don't have want to have more than a 1/3 of that amount used at any one time. More than half should never be used and this will not help you with any future credit applications. The providers of credit want to see how well you use these funds and how responsible you are going to be with it over time. If you use all the credit right away for a large purchase and then don't make the required monthly payment amounts, you're going to dig yourself further into a financial hole. This will also create the perfect environment to be denied on any other credit applications as well.
Once you know how to establish a positive credit history, then don't start making unwise choices. This is an item that accumulates over time and the longer history you have that is positive, the less your difficult financial times will matter. It's using information like this that will really turn a 500 credit score into a 750 or 800. The consumers who already have this high of a credit score know how hard they had to work for it and that is what they base their financial decisions on. It teaches you the benefits of hard work and the results are more access to increased credit amounts. You can accomplish a lot when your financial institution has full faith that you will in fact pay back a loan.
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State Guides to Credit Card Laws
- North Carolina
- West Virginia