How to Build a Good Credit Rating

From bartering in ancient times, to metal coinage, to paper currency, the latest stage and development in the evolution of currency is credit and credit ratings. With increasing ease and usage of the internet, and e-commerce, electronic transfers and so-called "plastic currency" is fast replacing cash. The way credit works is that it is a record of your spending and borrowing habits, and is used to determine effectively, how trustworthy/dependable you are with a particular transaction, will you be likely to make good on payments, or be unable to pay on time, if indeed at all? Whilst this is a simple mechanism to protect retailers from debt and bad creditors, it can be overly harsh, catching people somewhat unfairly meaning they are unable to buy things, or buy them at such a generous rate. Therefore, it is crucial that you maintain a clean and proactive credit rating. Just as sidenote, no reputation is as bad as a negative reputation, after all, if there is no history or record of your credit transactions, how else will lenders know you are worth the risk and effort? Bizarre as it may seem, you have to buy credit in order to get your first (crucial) step on the credit rating ladder. Think of it like Ebay with its feedback system, once you establish yourself with small, inconsequential transactions, then the bigger items will be much more accessible.

A great place to start is by opening a savings account, this is a huge plus with lenders, and the bank in question may offer you a credit card. If you do get a credit card, make sure to pay off any and all debts and outstanding charges immediately. This will ensure you are not hit with penalty charges, as well as increasing your credit rating "that your a prompt customer". Use retailer programs, so for any large purchase, which offers instalments of a fixed amount per month spread over an agreed period of time are a great way of increasing your credit.

Just make sure the retailer in question will actually reward you for your work by reporting your loan (or instalment payments) to the major credit bureaus. For a shortcut, get a co-signer for any loans you take out. This will allow you to take advantage of their credit score, and will also provide the lenders with an extra assurance that should you be unable to pay, then payment can be recovered from the co-signer. Note that this is double-edged sword, whilst you get the benefit of the co-signers good reputation, they will bear the brunt of your bad reputation if you fail to keep up with payments or generally default. If you are going to act as co-signer for someone, be very careful and draw up a clear strategy to avoid getting a bum deal.

Remember you are legally entitled to access your credit report at anytime, and this can give you a clearer idea as to what areas you need to improve upon to increase your flagging credit score.

Author is the editor of and

Online Marketing

If You Want to Shoot for the Stars You Might Have to Jump - Your success in real estate investing is waiting on you, but in order to capitalize on it you have to take action.

Private Property Sales - The truth about realtors and real estate agents in South Africa When you are interested in a home for sale in South Africa, you may be wondering about the real estate agents and realtors and how they behave compared to ones where you live.

Real Estate Opportunity during Tough Times - Mark Evans and his wife Lynda were angry at how things have gone from bad to worse in real estate industry that sent some of their friends in the industry to the tip of financial loss.

Why The Monopoly Game Is Bad For Your Wealth - Monopoly is a zero sum game based on competition, based on a limited money supply.

Wall Street Where Money Grows - I often wonder if market reports matter when most investors are too busy and distracted to pay attention.


© Copyright 2021, All rights reserved.
Unauthorized duplication in part or whole strictly prohibited by international copyright law.