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Advice on How to Establish a Good Credit History

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

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

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Bill's Answer
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Bills.com | Find Learn Save

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 your credit 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

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5 Comments

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  • BA
    Oct, 2009
    Bill
    Good payment history with utilities does nothing to boost a credit score, unfortunately. It sounds like you are taking significant steps to improve your husband's credit score. Please see FICO Score Calculation for more background information on how a credit score is calculated, and for tips on boosting your credit score.
    0 Votes

  • 35x35
    Oct, 2009
    Elizabeth
    Yes I was wondering if you could tell me if there are any companines that would report good payment history to the credit buraeu other than credit cards. (Companies like a cell phone bill, cable, internet, anything, etc.) I have one credit card now for three years that has only been $200 paid every month on time when I couldn't afford it last year they offered to up my limit but I didn't allow it and today I just tried to increase it now that my standing is better but they declined me without explaination do you have any idea why that would be? My husband and I have also contacted Lexington Law Firm who will start to fix our credit I added my husband on my credit card to help him out but do you have any other advice on how to rebuild credit? Our scores are very low, mine is 560 and my husbands is 521, but his credit was stolen years ago and we are just now fixing it. Plus I am only 21 and just want to establish myself in credit any tips for present date and near and far future? Sorry this was so long, thank you!
    0 Votes

  • 35x35
    Sep, 2009
    Nate
    You need to get your credit reports from each of the 3 credit bureaus. You can get a free copy of your report at www.annualcreditreport.com Once you get your report, you will need to check it for any inaccurate listings. If you see anything that looks suspect, you will need to dispute the same with the credit bureaus by sending them a letter explaining what happened. You can also use the services of an ID theft protection service such as Lifelock.
    0 Votes

  • 35x35
    Sep, 2009
    asif
    how i can clear my history i dont know what happens in my history some body use my id.
    0 Votes

  • AT
    May, 2009
    Arthur
    What about college students with a very low paying job or no job at all? Most banks, some credit unions, and other creditors give students unsecured credit products without a credit rating. On the other hand; if you are not a student of any accredited college, universtiy, or grudate school; but you have one or more sources of income for a long time and no credit history(not bad credit), than most banks and credit unions are not going to even trust you a unsecured small loan amount or low credit limit of $200, $300, or $500.
    0 Votes

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