1. Always make at least the minimum payment on your credit cards.

2. Pay your bills in the order of importance.

For example, pay your normal monthly mortgage or student loan payments before paying off additional (above minimum payment) amounts on your credit cards.

 

You don’t want to default on a mortgage or student loan because you did not pay the minimum required.

3. Create a budget of how much money you have coming in each month and how much money you have to pay each month. Work to bring in more money than you are spending.

4. Check your credit report and score at least every three months. This will provide encouragement and motivation for the work you are doing and will also enable you to quickly find any inaccuracies that appear.

5. If there are accounts or loans on your credit report that someone else is responsible for paying, consider taking your name off of those accounts. If that person misses a payment, it will also be on your credit record.

In addition to these items, there are additional steps you can take to help build your credit. Even if you’ve been turned down for credit cards and loans in the past, you can open certain kinds of new accounts and begin to build your credit through these accounts.

This chapter will show you a step by step approach for raising your credit score.

Department Store Cards

In order to build good credit, you need to begin having and using credit cards in a responsible manner.  A credit card will not hurt your credit score if used responsibly – in fact, it can even help your score.  If your credit score is low, however, you might find it difficult to obtain credit card offers.

In order to rebuild your credit, you need to manage your credit cards responsibly.  You should have at least one credit card and you should keep your balance on your card between 0% and 10% of the total credit limit.

However, what should you do if you cannot obtain a credit card because of your low credit score? 

Often, the solution is to use a department store credit card.