Good article from USAA on building credit history from scratch

1146426_house_question_2I get many first time home buyers in my office who have no idea about their credit history much less their credit score.  With a little preparation ahead of time, they could prevent an unpleasant surprise.

If you have an adult child that is just going out into the real world or college, it would be wise to discuss this with them. https://www.usaa.com/inet/pages/advice_building_credit?offerName=logoff_advice_building_credit

You should take advantage of the free reports offered by the bureaus once per year at www.AnnualCreditReport.com.  These reports won’t give you their score-they make you pay for that, but you are looking for any surprises and how any existing creditors are reporting your credit history.

Even if you’re one of those types who says I don’t need credit, you do need a credit history to get the best financing when the day comes to apply for a mortgage.  Contrary to what some like Dave Ramsey say, living without a credit score has many disadvantages.

If you open credit accounts, buy a tank of gas a month on the account and then pay it in full when the bill comes, you’ll build a history of responsible use and avoid finance charges.  This method works well while avoiding debt building up.  After 6 months, you’ll see the positive effect on your credit score.

I would add that if you’ve had a bankruptcy or foreclosure, you really need to make an effort to repair and rebuild your credit history.  You can’t shun credit simply because you had problems.  A good part of your credit score is how you manage your credit.  Avoiding it is not the same as managing it.

With a little advance effort, you can detect any errors, bad credit, and monitor how your existing credit is showing.  It’s common for me to work with borrowers some time in advance to get ready to purchase.  Should you need this help or know someone who might, call me.

 

 

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