smartconsumer: Building and Keeping a Good Credit History - Know

Building and Keeping a Good Credit History

{What to Know} {What to Do}


Your credit history describes how you use money. It includes things like:

  • How many credit cards you have

  • How many loans you have

  • If you pay your bills on time

If you have a credit card or a loan from a bank, you already have a credit history. Companies collect information about your loans and credit cards. Companies also collect information about how you pay your bills. 

What if I do not have a credit history?

You might not have a credit history if:

  • you have not had credit card

  • you have not gotten a loan from a bank or credit union

Without a credit history, it can be harder to get a job, an apartment, or even a credit card. It sounds crazy: You need credit to get credit.

How do I get a credit history?

To build a credit history, you will need to pay bills that are included in a credit report. Pay these bills on time.

  • Sometimes utility companies put information into a credit report. Do you have utility bills in your name? That can help build credit.

  • Many credit cards put information into credit reports.

    • Sometimes you can get a store credit card that can help build credit. Be careful of having too many store credit cards. Also be careful of high interest rates with store credit cards.

    • A secured credit card also can help you build your credit. A secured credit card is a card where you put a deposit down. If you do not pay your credit card bill, then the bank will take your deposit to pay the bill. Be careful of extra fees with secured credit cards.

What does “good credit” mean?

The illustrations below will help to explain.

That means:

  • I have more loan choices.

  • It is easier to get credit cards.

  • I pay lower interest rates.

  • I pay less for loans and credit cards.

That means:

  • I have fewer loan choices.

  • It is harder to get credit cards.

  • I pay higher interest rates.

  • I pay more for loans and credit cards.

That means:

  • I have no bank loan choices.

  • It is very hard to get credit cards.

  • I pay high interest rates.

  • Loans and credit cards are hard to get and cost a lot.

All of this information is revealed in your credit report.

Content Last Modified on 2/14/2013 2:48:50 PM