Building Your Credit History

When the credit card issuer needs to make a decision on a credit card application they rely on an individual’s credit report to make the determination of how likely it is that the loan will be paid off on time.

Almost everybody will need credit at one point and that makes it essential to build your credit history before you get to this point, since it can take many months to establish a good credit history.

The college student has the opportunity to start building their credit history through student credit cards. There are no minimum income co-signer requirements for a student credit card, making it relatively easy to get an approval even though the credit line may be low.

Getting that first credit card can be a difficult task after college for people with limited or no credit history. There are a few unsecured credit cards that can be applied for, but these cards come with high interest rates and do not have the benefits and features that most credit cards include.

The best alternative, when trying to build credit history, is a secured credit card. This type of credit card can be used the same way as an unsecured credit card, but you are required to make a security deposit into a special savings account in order to get approved for this card. The deposit will be equal to your credit line on the secured card and can be used to cover missing payments, which minimizes the risk for the lender.

You can choose your own credit line, based on the amount of your deposit, and the lender will report your credit line as well as your payments to the three major credit bureaus. This is the first step towards good credit, but you also need to make sure the lender will provide positive information to the credit bureaus.

Making payments on time every month will boost your credit score more than anything else. The length of your credit accounts and low credit utilization are also important factors when you are trying to build a good credit history.