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How To Build A Solid Credit Rating From Scratch

Building a solid credit rating from scratch is easier than one might think.  You can establish a decent Credit Score in as little as three months and have a solid rating around the 12-month mark. From that point, if you maintain proper borrowing habits, you can have an impeccable rating for the rest of your life.


Credit score, establish credit, rebuild credit, repair credit, Discover, Equifax, Empirica, Experian, TransUnion, American Express, Chase.

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Building a solid credit rating from scratch is easier than one might think.  You can establish a decent Credit Score in as little as three months and have a solid rating around the 12-month mark. From that point, if you maintain proper borrowing habits, you can have an impeccable rating for the rest of your life. 

The key is to understand what actions affect your rating and to follow a basic strategy design to keep you within the limitations of those influences. If you are starting from scratch, never having had credit, here is an easy-to-follow step-by-step guide to establishing your creditand suggestions on avoiding a few pitfalls along the way that could hurt instead of helping if you fall into them.

Step 1) Check Your Report

While it may seem ironic, checking your history is the first step, even if you have never had credit. Your report contains more than just credit accounts and may have inaccuracies pertaining to other areas. I had a $500 phone bill attached to my report, which I had nothing to do with.  It was tried at a business I worked for but it had no ownership or ownership responsibilities.

While it is relatively rare, you may be surprised that someone else has been using your good name instead of you. With the expansion of the internet, this occurrence is more common than it used to be. Regardless, it is good to know what you are dealing with.

Step 2) Dispute Errors in Your Report

You can move on to the next step if you find no errors in your report.  However, if you find a discrepancy, you must clean them up before you can proceed with your endeavor. 

It would be best if you took the time to do so and go through any possible frustration that might arise, as these errors left on your record will not only plague you but cost you much money.  It is the healthiness of your report that lenders base the interest rate they will charge you.

This can literally cost you thousands of dollars in interest over the years, and it will drive your monthly payments up for the same amount of money borrowed or charged. 

Step 3) Secure Personal Credit

Once you have verified your report and resolved any disputes you may have found within it, the next step is to secure credit.  This is easiest accomplished by securing a credit card. The fact that you have yet to be established will be a factor in where you should apply.

Rather than applying for standard card and loan offers, start with accounts tailored to meet a specific need. Applying for a standard card before your rating supports the requirement can place unnecessary negative marks on your report.  Each time you apply for credit and are turned down, it is recorded negatively on your account and lowers your already low score.

Your first attempt at securing credit should be a gas card, a department store card, a securedcard, or a prepaid card. These vehicles are specifically designed to offer credit for those with a low rating or for someone who has yet to establish themselves.  It must be pointed out that you can expect to pay higher interest as the risk is higher for the issuer.

In today’s boom, there are several quality guaranteed approved cards available for you to establish yourself with.  Each makes monthly reports to the reporting agencies, which assists in improving your credit score.  If you make your payments on time, your score will climb to a high enough level that you can apply for a standard card with normal interest rates. Remember, it is best to seek out offers than respond to those that come in the mail.

Step 4) Begin to Use Your Card

Once you have obtained a credit card, you must use it regularly and pay the balance off in full each month. Many who get a credit card for the first time will take advantage of the opportunity to get that stereo they want or some other consumable.

You should never use your new card instead of cash, especially while trying to build your credit. Rather, your goal should be to use your card to cover an expense you normally pay cash for, like gasoline or your noon meal. Instead of spending the cash, save it and use it to pay your charges in full when the bill comes in. 

Be responsible with your card, and you will realize your score rising each month. The higher the Credit Score, the lower your interest will be on the next card you apply for, and your odds for approval will increase drastically, to mention your borrowing power.

Step 5) Review Your Progress At least Quarterly

After you have used your card,you are responsible for threemonths’ check on your credit progress.  Providing you have been responsible, you will notice your score has increased. Check to ensure that all of your payments are being reported accurately.  If you find any errors, now is the time to take action on them to correct them before your portfolio gets out of hand.  Monitoring your report regularly allows detecting possible credit fraud in its early stages as well.

Step 6) Increasing Your Limit

As previously discussed, once your Credit Score reaches various levels and you have proven yourself to be a good risk, you will be flooded with numerous pre-approved offers. As stated, these offers are not always in your best interest, with many bordering on Predatory Lending. While it is your objective to increase your limit to a comfortable level, it is best to do the research yourself.

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