Ways to Build Credit

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Build credit by opening a department store credit card or general purpose credit card, making payments on time every month, getting a mortgage, or financing a car. Make payments every month to pay down debt and build credit with instructions from a certified public accountant and personal financial planner in this free video on credit scores.

Part of the Video Series: Tax Law, Real Estate & Credit Tips
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Video Transcript

Hi. I'm Miranda Chook, a CPA. If you want to know a few ways to build credit, let's first start by explaining that there are three major credit reporting agencies. Equifax, Experian and Transunion. Now you need to understand that certain types of companies report credit information to those agencies. They include banks, financing companies and credit card companies. So some easy way to start building credit would be then to open a credit card at your favorite department store. Or perhaps you're going to buy a major appliance or electronic and typically a company will actually give you better payment terms if you do that as well. You can also open a credit card, a general purpose credit card, like Visa or Master Card. Now don't worry if you pay off the balance every month, you'll still be building credit. And you'll be building very good credit as a matter of fact. So don't listen to that old wives tale that you have to have debt to build credit. Now, of course if you buy a home and you have a mortgage on that home, that's a huge way to start building your credit. Especially if you make sure to pay your mortgage on time every month. If you buy a car and initially you finance it, again, that will also build credit. Again, don't worry if you pay the loan off early, you're still building credit and building good credit if you're making your monthly payments on time. So as you can see, there are several very easy payments, quick ways, to start building credit. So good luck!

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