AR Factor Quote

Building a good credit history is difficult, but it isn’t nearly so difficult as trying to repair a bad credit history. Some high schools and colleges are now at least attempting to teach young people about credit history building. There’s a long way to go, but at least there is a little progress on that front.

The first credit that a young person gets is usually to buy a car. This first bit of credit is where building a good history begins. If a parent who has an excellent score can cosign the note for the young person, it will help substantially to receive a low interest rate on a car loan. But, sometimes the single most important factor of building up good credit is to make sure the loan is paid on time every single month it is due. If possible, pay a little in advance.

Credit cards are easy to get. They are far too easy to get, in my opinion, but that’s another story. The point here is that they are easy to get and they are the easiest and fastest way to build a good credit history. Much of credit worthiness is based on the level of credit available versus the level of debt.

If you have a credit card with a five thousand dollar limit and your balance is 300, this is considered a very good credit-to-debt ratio. Banks love to see goo credit-to-debt ratios. Credit reports that have great ratios are very nice to have. Having a past history of making payments and paying off a full balance on a card by each billing period due date will help greatly to build that great rating quickly.

Maintaining a good history is difficult. Life does happen. Individuals can get sick or injured. They can lose a job through no fault of their own. When bad things happen, the best thing to do for a credit report is to talk to creditors. Explain your situation and most creditors will work with you and will not file reports with credit bureaus that damage your credit rating.

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