How to Build Strong Credit

Building a positive credit report is one of the most important things you can do for your financial health. Good credit will lead to more approvals for new credit accounts and the best interest rates on credit cards, loans and mortgages. By opening new credit accounts and managing your credit responsibly, you can build a good credit report and score.

Instructions

1

Order a copy of your credit report from each of the three credit bureaus. You can get a free copy of your credit reports once a year through Annual Credit Report.

2

Review your credit report and ensure no negative items appear. If you do have negative items, contact the creditor listed on the report and make arrangements to pay the negative file, or dispute the file with the credit bureau using the form on the Annual Credit Report website if the debt does not belong to you.

3

Open a checking and savings account at a local bank. You will need to provide proof of your identity, such as your Social Security number and driver's license, and give the bank a small deposit to open each account.

4

Open a credit card. Many financial institutions offer credit cards that you can apply for online. If you have trouble opening a traditional credit card, open a secured credit card. You will need to put down a deposit before opening a secured card.

5

Open a store card. Apply in-person for a store card at a store you frequent. While you can only use the card in the store, it will report monthly to the credit bureaus.

6

Get a loan. Take out a small personal loan with your bank or apply for a larger loan, such as an auto loan, if you need one. Having a mix of credit types will raise your credit rating.

7

Use your credit card and store card sparingly throughout the month. Keeping your balances low will boost your credit score. According to personal finance columnist Liz Pulliam Weston, you should keep your credit balances below 30 percent of your available credit.

8

Pay at least the minimum amount due on your store card and credit card by the due date each month. Paying your bills on time has a large impact on your credit report.

9

Pay your loan payment by the due date each month.