How to Build a Credit Rating

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Building up a credit history requires getting a credit card at a young age, taking out a very small loan and making timely and consistent payments on it. Build up credit history as a young adult with information from a financial manager and currency trader in this free video on finance.

Part of the Video Series: Credit Reports & Credit Scores
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Video Transcript

Hi, I'm Roger Groh. We're here today to talk about how you can build your credit rating. Well, there are some easy steps. If you already had taken out a loan be sure that you make your payments on time, and be sure that that once you've made those payments on time that it's accurately reflected in your credit history report, which you can get for free online. You can Google it, credit history report. They send you one, E-mail, immediate. Just make sure that you get proper credit for payments that you've made, especially if they're on time. Second, if you have no credit, let's say you're a kid, and you've never taken out a loan before. It's very difficult then to go into a bank and expect them to loan money to you for a car, for a house, for some other project that you need money for. And so, it makes sense to establish some credit early in your life so that when the moment comes, and you're going to need a larger amount of money that the banks will be willing to lend it to you. The easiest way to do that is go take out a very small loan, a hundred dollars, two hundred dollars, at a credit card company or perhaps a bank, and then make regularly scheduled payments and pay them back online. That way, you can build a a very positive credit history even though in the past you haven't had one. The dollars are not the important thing here. It's the on time part of it that is, and that is the point to stress. And that is how you build your credit history. I'm Roger Groh.


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