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Easy Ways To Establish Your Credit

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Having good credit is very important in today’s economic environment. Being approved and getting a good rate on a mortgage or most other loans depends on having a decent credit score. Your credit information is also used by insurance companies, landlords, cellphone companies, and employers to evaluate applicants and to set rates. In order to establish your credit, there are some things that you must do to have the right information entered into your credit history.

Using Credit To Establish Credit

The fastest way to establish your credit is by using both of the two main types of credit: revolving accounts, which includes credit cards; and installment loans, which includes mortgages and auto loans. There are many credit card companies that will issue a credit card to an individual that does not have an extensive credit history, although the interest rate charged on the purchases will be higher than the interest rate given to those that have already established their credit. The FICO credit-scoring formula predicts people’s risk of default and responds best when the subject actively and responsibly uses credit. Ensure that you pay these creditors on time and you will see your credit score rise quickly.

Get Added As An Authorized User On Someone’s Credit Card

If you become an authorized user on someone else’s credit card, their record of on time payments and responsible credit usage can help increase your credit score. Even if you do not have access to actually use the card, the credit card company will export the payment records to your credit history. As long as the primary account holder continues to use the credit card correctly, your credit score will continue to grow. If the other person messes up, you just need to be removed as authorized user for the negative information to disappear from your files.

Become A Co-Signer

Becoming a co-signer on a loan can help you obtain a loan that can help you build your credit score quickly. The payment history for the loan will be reflected in the credit histories of both parties because both of you are equally responsible for the debt. You cannot be removed from a co-signed debt, as it must be paid off or refinanced before you are released from the obligation. A missed payment on the loan can trash both individual’s credit scores and may be listed in your credit report for up to seven years, so it is very important to ensure that all of the payments for the loan are made on time.

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