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Credit From Scratch

Celebrating 75 years of service

A good credit history makes it possible to get credit, especially for major purchases like a home or car, and it keeps the cost of all borrowing to a minimum. A bad credit score may also make it expensive or impossible to get some education loans, potentially making it difficult to complete your degree or go to graduate school.

To build and maintain good credit, consider these tips:

  • Use your bank account responsibly - bounced checks could make it difficult to open other accounts in the future.
  • If you have services in your name such as telephone, cable, gas or electric, make sure you pay your bills in full and on time.
  • A credit card may is a good way to build your credit. Some companies offer secured credit cards specifically for people building or repairing their credit. To apply for a secured card, you’ll need to send the company a refundable security deposit that you'll get back once you close your account.
  • Banks, credit unions and online lenders may offer credit-builder loans for people who want to build or rebuild their credit. Similar to a secured credit card, the lender will hold onto funds that secure the loan. You may take out the loan, but rather than receiving the money the funds get set aside in a savings account until you pay off the loan. 
  • Always make payments for loans and credit accounts by the due date each month. Even being one day late may increase your interest rate and may result in a late fee ($35 on average). If a payment is more than 30 days late, your credit report may be negatively impacted for up to seven years.
  • If you have an emergency and cannot pay your bills, contact your creditors. Before you call, have a clear summary of why you can't pay and what you would like the creditor to do to help. For example, if you can't afford a $100 minimum payment, maybe you can afford a $40 minimum payment.
  • Review your credit report periodically for accuracy. Knowing what's on your credit report will give you a chance to dispute any information you feel is inaccurate.

If you've been denied credit based on information in your credit report, the lender is required under the Fair Credit Reporting Act to provide you with the name of the credit reporting agency and tell you that you may obtain a free copy of your credit report at your request. Otherwise, you can use the AnnualCreditReport.com website to review your report.