How to Build Good Credit and Why It Matters

As with many items in life, with a little attention and care across time, better outcomes tend to appear.  One such example comes in the form of building good credit.  

What You Need to Know About Credit Reports and Credit Scores

To understand how you can improve your credit score, you will first need to understand your credit report.  Fortunately, the U.S. government has mandated the three major credit bureaus (Experian, TransUnion and Equifax) each provide one free copy of your credit report per year at

What is a Credit Score?

The second item you will need to understand regarding your credit history involves your credit score, a numerical representation of your creditworthiness. Higher scores indicate better credit and can make you a prime borrower, whereas lower scores place you in the subprime borrower category.

Credit cards represent one of the easiest and most commonly-used forms of credit.  These financial tools provide access to lines of credit for you to finance common consumer purchases instead of using your own money at the time of purchase.

Credit Cards

Applying to Different Types of Credit Cards

For the purposes of credit scores, you will want a diverse mix of retail store and major credit cards. As a good place to start building excellent credit, you can begin by applying for a small specialty retail store card, and then proceed with another major retailer.

Authorized User Accounts

If a family member (i.e., spouse, parents, siblings) already carry one of these retail or major credit cards, you might consider asking them to add you as an authorized user to their account.  The paperwork for this arrangement rarely requires filing a credit card application.

Cosigned Loans

Having a trusted, creditworthy person cosign a loan can help you receive better terms on an auto loan for a new or used vehicle. These loans pose lesser risk to the lender because the purchased vehicle secures the loan, meaning should you or the cosigner fail to make payments, the lender can simply repossess the car in satisfaction of the loan.

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