Your 5-Step Action Plan To Build An Impressive Credit History
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Posted On :
Nov-13-2009
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Article Word Count :
534
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Building an impressive credit history is a dream for many and a reality for some. A positive credit report plays a vital role in getting low insurance rates and getting favorable terms on mortgage, car loans, and student loans. Moreover, it also helps in negotiating with your creditors when it comes to debt settlement.
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Building an impressive credit history is a dream for many and a reality for some. A positive credit report plays a vital role in getting low insurance rates and getting favorable terms on mortgage, car loans, and student loans. Moreover, it also helps in negotiating with your creditors when it comes to debt settlement. Considering your good records, they may not mind reducing the interest rate that’s payable on your debts so that you could pay off your debts comfortably.
So, What Exactly Is This Credit History?
Your credit history is a report that summarizes the details of the monetary amounts borrowed by you over a period of past 7 to 10 years. There are three credit bureaus from where you can get your credit report – TransUnion, Equifax, and Experian.
How Do They Calculate My Credit Score?
Your credit score is calculated on the basis of the details provided in this report. This score is also popularly referred to as FICO score. Though there is no exact formula known publicly about how they calculate this score, but we do know about the major components that contribute to your credit score. When the ratings of all these five components are out together, it is determined how good or bad your FICO score is.
1) Types of credit used – 10%
2) New credit – 10%
3) The length of credit history – 15%
4) The total amounts that you owe - 30%
5) Payment history – 35%
Your 5-step action plan to build an impressive credit history is about taking care of these five components. Here’s how you go about it.
Action Step I – Get Some New Credit
If you have never applied for any form of credit, your first action step should be to get some new credit. An easy way is to apply for a credit card – but not more than one. In fact you had better opt for a secured credit card - regardless of the terms and conditions. The biggest advantage of getting a secured credit card is that you will never get into debt because in this type of card, you are supposed to pay a specific amount of money (Say $500) in advance. Whatever you spend, the amount is deducted from this amount. This is your maximum spending limit. When this amount is exhausted, you cannot use the card anymore. Any company will readily agree to issue you with a secured credit card. This way is the safest way to build a new credit. Most importantly, since it is a credit card, it will make your credit history healthier. However, as said earlier, you are not recommended to opt for more one credit card, even if it is a secured one.
In the next part, I will walk you through the remaining four action steps that you can follow to strengthen your credit history. I will tell you about how to keep your payments up and take care of your payment history. Meanwhile, you can visit my website to know more about credit counseling and how to manage your debts in the most efficient manner.
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Article Source :
http://www.articleseen.com/Article_Your 5-Step Action Plan To Build An Impressive Credit History_5423.aspx
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Author Resource :
The finance enquiry blog can be your one-stop information source to the factors influencing credit score. Directing your queries to such factors can be an important step leading to the build-up of a good credit history.
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Keywords :
credit history, debt consolidation, credit debt consolidation, finance enquiry,
Category :
Finance
:
Debt Consolidation
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