How to Build Good Credit

Unfortunately, the only way to build good credit is to establish a good credit history. This means that it is necessary to buy things on credit. Lenders use your credit score in order to determine whether or not you are a good credit risk.

Following these steps will help you to rebuild credit and obtain low interest credit cards.

Difficulty: Moderate

Instructions

1. 
   Credit Card Debt

   Obtain a credit card – This step seems almost too obvious. It is, however, a necessary evil. You must obtain a credit card, or begin using any credit card that you already have. Try and find a credit card that has no annual fee and a low interest rate. Earning cash-back or other such bonuses is optional.

2. 
   Lower My Debt

   Buy a Few Small Items – Begin by making a few small purchases that you can pay off immediately. When I was trying to establish a better credit history, I would charge the gas for my truck. As soon as I got home, I would send a check for whatever amount I just spent to the credit card company.
   
   In this way I was avoiding any interest charges and was learning how to build good credit. If you ware trying to build good credit, ensure that you do not charge anything that you cannot pay off immediately.

3. Open a Prepaid Credit Card – If your credit is so poor that you cannot qualify for a credit card at any interest rate, you may be able to open a prepaid card. For this type of credit card, you actually send the company money in advance, before any purchases are made. Once you make a few charges, the money you have sent in will be used to pay for your purchases.
   
   Eventually, the credit card company will allow you to make charges without having to send them money first. This is a positive step when you are trying to build good credit.

Tips & Warnings

• Never charge more than you can pay off at the end of the month.
• Try sending in multiple payments each month. Remember that you are always required to send in at least the minimum amount due but you can send in additional amounts to pay down your debt faster.

Resources

• Debt Cures
• Scratch Beginnings
• Keep Warm without Spending Money

[ShannonBeineke]

on 12/8/2008 It also helps to have a credit card with a mastercard or visa logo.

[RadiantShadows]

on 12/5/2008 Great advice!

[bar10dr98]

on 12/4/2008 Great advice on building good credit, thanks!

[sunshine11219]

on 12/4/2008 good facts