Things You Can Do That May Help Build Good Credit

Making your payments on time and repaying your debts as promised may exhibit good credit. When you have good credit, lenders are more confident that you will be willing and able to pay on your loan.

You may hear terms like "rebuilding," "repairing," or "re-establishing" credit. They all pertain to improving your credit health. It is important that you take action to improve an unhealthy credit situation. By acting now, you may avoid much larger problems such as bigger debts, loss of your assets (like your house!) and a bad credit report. There are several steps that you can take that may help you to rebuild your credit:

• Develop a budget. Take control of your financial situation by assessing how much money you have and how much you spend.

• Reduce your expenses. Cut out any unnecessary spending. Avoid impulse purchases.

• Contact your creditors. Try to work out a payment plan so your payments are manageable.

• Ask for help. See "Where to Go for Help" for more information.

Steps to maintaining good credit:

1) Do not charge more to your credit cards than you can afford to pay at the end of each month. If you have carried a balance on your credit card, try to pay more than the minimum payment that is due. For example, spending $1,000 on a card with an 18% interest rate and making minimum payments (roughly $20) takes you over seven years to pay off this debt! You end up spending $1,800 in the end.

2) Do not exceed your credit limit. This is a sign to potential lenders that you're in too much debt. If you have co-applicants or authorized users on your account, keep an open communication line on usage to avoid going over your credit limit.

3) When managing your finances, try to save money each payday for emergencies.

4) Keep track of your bills. Get into the habit of scheduling time to pay bills each week to avoid late payments or over-due notices. Increased inquiries may be a consideration of your creditworthiness. Grace periods are not an extension of your due date. Always mail your payment early so it arrives before your due date. Consider having your payments made electronically to ensure your payments are on time and save postage!

5) Know what is in your credit report. Contact the credit bureaus for a copy of your report.

Did you know...

• Bankruptcies can be reported on your credit report for 10 years?

• Information regarding lawsuits or judgments against you can be reported for 7 years?

• Default information involving the U.S. Government insured student loans can be reported for 7 years?