How to Get a Good Credit Score

The rates in the photo are not current (they were as of '03) but the fact still remains that having good credit saves you money. Chances are that at some point you will want a loan to buy a car or a house. Having good credit will mean you can get a lower rate.

Difficulty: Moderate

Instructions

Things You'll Need:

• internet access
• self control
• ability to keep track of bills and deadlines

1. The first thing to do is to check your credit report. IMPORTANT: Do not pay to get your credit report! It is available for free at www.annualcreditreport.com. You are entitled to a free credit report every year. Other sites (especially the ones advertised on tv) are not really free.

2. Experian, TransUnion and Equifax at the three agencies that monitor credit. It is important to make sure that the information in your report is accurate. Check your report carefully when it arrives. If it isn't, you can write to the agencies and correct the situation.

3. Consider if you can handle getting a credit card. Can you be organized enough to pay on time? Can you be sure you won't charge more than you can pay back? If so, you should get a credit card. Having one and using it wisely will raise your credit score since it will establish a track record of paying back on time and thus raise your credit score.

4. If you are a fulltime college student, it will be easier to get your first credit card. However even if you aren't, there are still great options out there. Try the following link to pick the credit card that is right for you. http://www.bankrate.com/creditcards will help you choose the one that is best for you. Make sure to choose a credit card with no annual fee.

5. Only apply for one credit card every six months. If you apply for too many too quickly that will lower your credit score. Stop when you have two or three so that you can easily keep track of them. Also, having too many credit cards can lower your credit score.

6. Use your credit cards, but only use about 25% or less of your credit limit. If you don't know what your credit limit is, call the phone number on the back of your credit card and ask. Following this advice will raise your credit score significantly.

7. Pay off the total balance on your credit card every month before the due date. If you pay by check, make sure the check is sent 10 days before the due date just in case the mail is delayed. However it is best to pay over the internet. This is the single best way to raise your credit score over time.

8. Keep at it. Keep organized and keep using your credit cards wisely. You are on your way to an excellent credit score.

Tips & Warnings

• If you are ever one day late on your credit card payment, make sure to call the credit card company. Most of the time they will waive the fee just that one time.
• Do not use the checks they send you with your credit card bill. They are considered "cash advances" and have huge fees associated with them.
• Remember, slow and steady wins the race. There is no legitimate way of raising your credit score quickly.
• Do not get a Capital One credit card. They do not report your credit limit properly, so it makes your credit score lower than it should be.

Resources

• Annual Credit Report.com