Advice on How to Establish a Good Credit History - The Bills.com Blog

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Advice on How to Establish a Good Credit History

Question: I have not declared bankruptcy and it's been 10 years will my credit be clear? How does one establish a good credit history?

Answer: I don't understand what you mean when you ask about your credit being clear. If you are asking about your credit score, then unfortunately I do not have sufficient information about your situation to answer your question. The best way to check on yourcredit is to check your credit report. There are many websites that offer you a 3 in one credit report and score. I suggest that you start from there. Since you are inquiring about your credit, here is a little information that might be useful for you.

You cannot establish a good credit history simply by paying your rent and utility bills on time. In order to build a positive credit history, and thus establish and maintain a good credit score, you must open, use, and timely pay credit accounts that regularly report to the three major credit bureaus (Equifax, Experian, and TransUnion).

Accounts that should help you build your credit rating by reporting positive payment information to the credit bureaus include auto loans, home mortgages, credit cards, and personal loans. A person with no credit accounts, would have neither a negative nor a positive credit history; rather, he would have no established credit history (frequently called a "thin-file"

consumer), which would make lenders hesitant to loan him money as they would have no information to judge his credit risk. From a lender’s point of view, having no credit is similar to having bad credit, as lenders generally do not want to lend money to someone who has no past history of paying his creditors on time.

Thankfully for consumers with no established credit, it is generally much easier for them to establish a good credit history than consumers with past credit problems. Consumers with negative credit listings, such delinquent accounts, must establish new positive credit lines to try to counterbalance the negative impact of their delinquent items. However, consumers with no established credit history do not have any negative listings weighing down their credit score, so opening credit accounts and making their payments timely should build a positive in a relatively short amount of time. And the longer they make their payments on time, the more

their credit ratings should improve.

Your credit rating is calculated based on several variables, including your payment history (do you have any late payments, charge-offs, etc.), the amount and type of debt that you owe, if you have maxed out any of your trade lines, and then several other secondary factors like the length of your credit history and how many recent inquiries have been made to look at your credit history. Since your past payment history accounts for approximately 35% of your FICO credit score, establishing a good payment history with your creditors is essential to building and maintaining a good credit rating.

To learn more about credit, credit reports and credit scores, I encourage you to visit the Bills.com Credit Resources page.

I hope that the information I have provided helps you Find. Learn. Save.

Best,
Bill
www.bills.com/blog

Also, make sure to get a free financial health check-up with Bills IQ!

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Bill has answered all sorts of questions and has been able to provide those in need of financial guidance with helpful and valuable advice and information on their specific financial area of interest. If you need specific guidance on any of the above mentioned financial areas, feel free to Ask Bill your financial questions and get better informed. Also, make sure to get a free financial health check-up with Bills IQ!

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