How To Establish Your Credit History

A positive credit history and good credit score are not established overnight. More than 50 million Americans — including immigrants, teenagers, and people who have always applied for credit in a spouse’s name — have little or no credit history.  

  • The first step is to get on the credit “radar” by applying for some kind of

credit, such as a secured or low-balance credit card, and using it sparingly. Many credit card companies recruit college students by going to campuses and offering free gifts such as T-shirts to students who apply for their credit cards. According to Loan Advisor Reliable Money Lenders in Singapore these credit card offers are dangerous; a single late payment can send the interest rate skyrocketing, and the credit limit soon increases from a few hundred dollars to two or three thousand, tempting a student further into debt. If you can use one of these credit cards responsibly, making an occasional purchase and paying it off by the due date, you will gradually establish your credit history. You will know you are on your way when you start to receive more favorable credit card offers from other companies.  

  • Do not open more than one or two new accounts per year, because too

many new accounts have a negative impact on your credit rating.  

  • Use less than 50 percent of the available credit on each account. The

ratio of outstanding credit balances to available credit is another component of your credit score.  

  • Do not “shop around” too much for consumer credit. An excessive

number of credit applications brings down your credit score. If you are looking for new private student loans, submit your applications and do price comparisons within a 30-day period rather than over an extended period of time.  

  • Pay all your bills on time, including cell phone, medical bills, utilities,

electricity, rent, and parking tickets. Even a minor late payment, if reported, can lower your credit score. There is a growing movement to establish alternative credit scores, such as the FICO Expansion score, for consumers who have no prior credit relationships. FICO partners with Pay Rent, Build Credit, Inc. (PRBC), and enables consumers and small business owners to build a credit rating based on their history of making rent and other recurring bill payments. PRBC

charges a fee to verify payment information entered by individuals. PRBC reports and FICO Expansion scores are accepted by some lenders, insurers, and employers as proof of creditworthiness. First American Credco, LexisNexis, and TransUnion also gather information about individuals’ payment histories for lenders.  

  • Check your credit report regularly. Section 211 of the Fair and Accurate

Credit Transactions Act of 2003 provides for every consumer to receive one free credit report annually from each of the three major consumer credit reporting agencies (Experian, TransUnion, and Equifax). This can be ordered online from , created by the three credit bureaus to fulfill this requirement. You can also obtain your free credit report by calling 1-877-322-8228 or by mailing a request form to: Annual Credit Report Request Service P.O. Box 105281 Atlanta, GA 30348-5281  

Savvy Student Tip: Do not be taken in by offers of “free credit reports.” A number of online businesses offer a “free credit report” as a means of recruiting customers for fee-based credit protection services. AnnualCreditReport.  com is the only official site where you can obtain your annual credit report without any fee or further obligation Under federal law, you are also entitled to a credit report within 60 days of receiving notice that a company has taken negative action against you, such as denying your application for credit, insurance, or employment. The notice should contain the name, address, and phone number of the consumer reporting company that provided the financial information.

You are also entitled to one free report a year if you are receiving welfare, are unemployed and plan to look for a job within 60 days, or if your report is inaccurate because of fraud, including identity theft. Otherwise, a consumer reporting bureau may charge up to $10.50 for an additional copy of your report, if requested within a 12-month period.  You can request the free reports from each of the credit reporting agencies at different times during the year, giving you an opportunity to see whether your credit report has improved or deteriorated because of any actions you have taken. Each agency’s report is slightly different, but the key information will be similar.