

Establishing good credit

February 27, 2013
The Daily News

Do you know your credit score? Just visit XYZ web site and...

You've seen the ads. There are plenty of places to check a credit score. Consumers are constantly being bombarded by come-ons.

Actually, checking one's credit score is a good idea. What's more important, however, is establishing a good credit rating.

Without it, people who are just starting out might find it hard to get a loan or a credit card.

Having no credit history makes it difficult for lenders to know if a person is a good risk to repay a loan and make payments on time, reports the Federal Trade Commission.

Establishing a good credit history is not as difficult as it seems. In all cases, however, individuals will need to make payments on time.

Some tips include:

- Apply for a credit card through a local store. Local stores are more likely to extend credit to people without an established credit history.

- Apply for a secured credit card. By borrowing against your own money, creditors find this to be far less risky.

- Ask someone with a good credit history to co-sign on a loan or a credit card application. By co-signing, the person is agreeing to pay back the loan if you don't.

OK, let's say you have had some credit problems, and need to improve your credit rating.

If you've charged too much on credit cards or are paying less toward your debts than you should, you're not alone.

A lot of people are in this situation. The Federal Trade Commission offers some ways to turn things around:

- Budgeting: In many cases people design and stick to a budget to get their debt under control. A budget is a plan for how much money you have and how much money you spend. Sticking to a realistic budget allows you to pay off your debts and save for that rainy day.

- Credit counseling: Many universities, military bases, credit unions and housing authorities operate nonprofit financial counseling programs. Some charge a fee for their services. Creditors may be willing to accept reduced payments if you are working with a reputable program to create a debt repayment plan.

- Bankruptcy: Bankruptcy is absolutely the credit solution of last resort. Unlike negative credit information that stays on a credit report for seven years, bankruptcies stay on a credit report for 10 years. Bankruptcy can make it difficult to rent an apartment, buy a house or condo, get some types of insurance, get additional credit, and sometimes, get a job. In some cases, bankruptcy may not be an easily available option.

Individuals could also contact their creditors.

Let them know that you're having trouble. Some might be willing to work with you.

Once you've earned a good credit rating, protect it.

Credit cards make buying things easier than ever, but it's important to keep track of your spending.

Each time you buy something with a credit card it's like taking out a loan. Incidental and impulse purchases add up, and when the bill comes, you have to pay what you owe.

Another reason why it's important to keep track of your spending is in case there are inaccuracies on your statement.

If you notice a problem, promptly report it to the credit card company. Records to keep when you're buying online or through a catalog include printouts or copies of each transaction or form, confirmation codes, a copy of the catalog you're using (if applicable), and the warranty, return and refund policies.

If you have a credit card, here are some other tips to protect your account:

- Never lend your credit card to anyone.

- Never sign a blank charge slip.

- Never put your account number on the outside of an envelope or on a postcard.

- Always be cautious about disclosing account numbers on the telephone.

- Carry only the credit cards you need.

- Keep a record of your account number, the account's expiration dates, and the phone number and address of each credit card company in a secure place.

- Report lost or stolen ATM and credit cards to the card issuers as soon as possible. Follow up with a letter.



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