Financial Education Clearinghouse

Building a Credit History

Credit History

Maintaining a good credit history means that you increase your access to loans and lower interest rates.

Below are tips for building a good credit history:

  • Apply for a small line of credit or credit card
    Consider applying for a small line of credit or obtaining a credit card with a low line of credit. Make small purchases and get in the habit of paying them off at the end of the month to avoid finance charges.
  • Keep balances low on credit cards
    Continuous and high outstanding debt can affect a credit score. If you use your credit card to build a credit history, take it easy. Charge small amounts and pay in full each month. Avoid maxing out your card.
  • Don't open a lot of new accounts rapidly
    New accounts will lower your average account age, which will have an impact on your credit score if you don't have a lot of other credit information. Rapid account buildup may also look risky if you are a new credit user.
  • Pay your bills on time
    Credit scores are based on whether or not you pay your bills on time. Make it a goal to never miss a payment date. Consider paying your bills ahead of time or signing up for auto bill pay to make the task simpler.
  • Monitor your credit reports and score
    Review your credit report for free at www.annualcreditreport.com. If you notice any errors, be sure to dispute them right away with both the credit bureau and the company/charge you have a dispute with. It is also a good idea to check your credit score from time to time to see how it might affect your ability to obtain credit and low interest rates.
  • Know how your credit history is scored
    Learn more about what goes into your FICO credit score by visiting the FICO website.
    FICO: What's in your score