Guidelines To Establish Good Credit

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Getting approved for credit is the first step but ensuring you build a solid history of good credit is an on-going process.

  1. Learn as much as you can about credit reports and credit scores.
  2. Apply for a credit card or loan from a bank or credit union.
  3. Make payments on time and pay off your balance in full. That means not spending more than you normally would with cash.
  4. Keep credit card balances low.
  5. Track your spending and don’t exceed your credit limit.
  6. Don’t use cash advances as interest rates are much higher with additional fees.
  7. Keep your accounts open to ensure your average account age is long.
  8. Don’t apply for too many credit cards all at once.

Prepaid Cards, Debit Cards, Cell Phone Payments, Utility, And Rent Payments 

You are not establishing a credit history with these products. These providers do not report your payment information to the credit bureaus.

Prepaid cards or debit cards do not establish credit and are not reported to credit bureaus. Additionally, payments to landlords, cell phone, or utility companies aren’t reported on credit reports, however, nonpayments or uncollected funds may be reported to credit bureaus. These nonpayments become collection accounts that will negatively impact your credit score. Additionally, debit card usage or prepaid debit cards do not establish a credit history.