Creating A Positive Credit History

Your credit history stays with you wherever you go. Future loans, credit card accounts, employment, and housing all require a clean credit history. To start creating a positive credit history, let us first take a look at some basic credit facts.

This will help you see how to keep a clean credit history - establish a positive credit history - and stay out of any credit troubles.

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Managing your money right from the start is the practical way to go. Always know the grace period, annual fees, cash advance fees, finance charges, and annual percentage rates (APR). If you intend to carry a balance on your account, you need to shop around for a lower APR, even if it will mean paying a higher annual cardholder fee. By researching what you are looking for you can choose the right credit card for you.

Always Keep track of your current purchases. Avoid large impulse purchases at all costs. Do not use a cash advance to cover your normal daily expenses. And remember the 20/10 rule: you must never borrow more than twenty percent of your current annual net income; and do not ever let your monthly credit card payments become more than ten percent of your monthly net income.

Exceeding your credit card limit is usually considered a violation of your account agreement and will probably result in some additional fees or penalties, or even the freezing or cancellation of your account.

For most credit cards, one can avoid finance charges by paying off the total balance within a reasonable time period. It is much like an interest free loan for up to thirty days: purchases paid off during this current billing period will not accrue interest.

If you can not pay off your total balance each month, you must at the very least, try to pay more than the minimum required payment. Otherwise, you will end up paying more than the original purchase price (based on pay back time and interest rate). There are many credit card worksheet tools on line that can help you figure out what your minimum monthly payment will be. I encourage you to use these tools. Always be sure to get your payment in by the due date to avoid a late fee as well as possible credit damage. It is almost guaranteed if you are even one day late you will accrue a late fee.

If you have changed your name, address, or job, notify your lending institution immediately. You do not want to risk any late payments. You should also contact your lender if for some reason you cannot make a payment on your account. They just may be able to arrange a special payment option that can help you avoid any credit problems.

Financial institutions will generally evaluate you based on the 3 Cs.

1. Character (credit history);

2. Capital (assets that can be used as collateral);

3. And capacity (your ability to handle the added debt based on your current income, debt, and expenses).

Using this knowledge to your benefit will almost ensure your will create a positive credit history for yourself.