In today's tight credit market, the idea of having no credit history can be enough to give a person nightmares. But fear not -- it is possible to establish solid credit that will keep bad dreams at bay.
Most creditors look at an individual's credit (or FICO) score, which typically ranges between 300 and 850, to help determine the likelihood that the person will repay debts. The score is calculated based on factors including:
* Repayment history - A history of not paying debts, or not paying on time each month, will lower scores.
* Amount of credit used - Credit lines near their limits, or maxed out, negatively affect credit scores.
* Amount of overall debt - Too much debt makes it less likely you could pay off additional debt. Too little debt offers creditors limited payment history, making it difficult to judge credit worthiness.
If you have a low credit score because you have not established credit, the good news is that you probably are not haunted by an array of unpaid debt. You can work to build good credit history - and your effort will pay off when your score helps you buy the car or home you need. To get started, try these six tips:
1.Understand your credit rating. Review your credit report for free once a year. Visit the Web sites of the three major credit reporting agencies (Equifax, Experian and TransUnion) or http://www.annualcreditreport.com, or call to request your report. The higher the credit score, the better.
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[Source: Yahoo! News Search Results for credit cards]
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