Building a Credit History

Building a credit history is critical if you want to purchase a home.  Credit history is what lenders look at to determine whether or not to give you a loan and can impact the interest rate on the loan.  It is important to take the steps necessary to building not just a credit history but a good credit history.

For those with no credit history one quick and easy way to start building one is by getting a credit card.  This should only be an option for those that are fiscally responsible and have the means to pay the balance off each month.  If you get a credit card you want to be sure to never charge up to the limit of the card as this will affect your credit score due to your utilization of accounts.  Utilization of accounts is the portion of your credit limit that is currently being used.  Carrying balances close to your credit limit can negatively impact your credit score.

Another way to build up a good credit history is through renting a property, purchasing a car with a loan, and paying for utilities and other bills in your name.  Any monthly payments such as these are reported on your credit report and the longer you pay all your monthly payments the higher your credit score. 

Remember that while working to build your credit history you do not want to over commit and take on too many monthly payments that you cannot afford.  You will keep your credit score higher by paying all your monthly bills on time.