How to Build Your Credit History

Here's the facts about good credit -- it makes life easier and less expensive. If you have poor credit, you'll pay more for anything that you finance. Negative credit can prevent you from buying a car, renting an apartment or even getting a job, depending on the circumstances.

If you have no credit, on the other hand, you'll still struggle to find competitive interest rates and terms.

Given the critical importance of establishing good credit, let's take a look at some of the most impactful things you can do to build your credit history.

Open an account

Opening a checking account is one of the basics of good financial practice, and having a demonstrated banking history will help build your credit.

While banks offer different terms and incentives in order to earn your business, we suggest giving your local credit union a look – like KeyPoint Credit Union. Because credit unions are generally not for profit organizations, they often offer higher interest rates on savings accounts and competitive interest rates on loans to their customers.

Open your first credit card account

Securing a new credit card and establishing a history of paying on time is one of the fastest ways to build your credit history. Make sure you only make small purchases that you can pay off in full at the end of every month, because one of the key factors that influences your credit score is the percentage of available credit you're using.

If you're having difficulty getting a card, you can consider using a secured card (these often require a corresponding deposit from you) or become an authorized user on someone else's card. Make sure you check each credit card offer closely for the terms offered (interest rates, introductory rates, rewards programs, etc.).

Finance a vehicle

Making regular payments on a car loan is another quick way to establish credit. It's important, however, to make timely payments every month. 

Auto loans are available to borrowers with poor credit or no credit (the car acts as collateral), but you'll need to be very careful with regard to the interest rate being offered. Never borrow more than you can afford, and avoid paying excessively high interest rates.

Pay student loans on time

Student loan payments are reported to the major credit bureaus, so prompt payment is a great way to build your credit history.

The takeaway

Building your credit history is the first step toward financial success, and KeyPoint is here to help you make that happen.