First American CREDCO - Credit Education

	Credit Reports

	FICO Scores

	Lenders & Credit Scores

	Establishing Good Credit

	Cost of Bad Credit

	Correcting Mistakes

	Revised Credit Report

	'Thin' Credit File

	No Credit File

	Alternative Credit Reporting

In order to qualify for a good home loan you will need to prove to the lender that you are a good risk. The best way to prove this is to pay your bills on time and keep your debt under control. Following the steps below will help set you on the right path:

Open a Checking Account
Make sure you keep track of your balances and do not overdraw and bounce checks.

Record All Transactions
Record every check, deposit and withdrawal in your checkbook register. Compare the register to your bank statement frequently. The more often you balance your checkbook, the less likely you will be to bounce a check.

Apply for a Credit Card
Ask your bank about opening a credit account. Carefully review the credit terms. Make sure the bank will report your performance to a credit bureau so you can begin to build a credit history. If you cannot get a regular credit card, ask about a secured credit card, or apply for a department store card. A secured credit card is a card that requires you to put money forward to guarantee payment. For example, if you put $500 towards a secured credit card, you will get a card with a $500 limit that you can use like any other credit card. The bank holds the $500 deposit in case you do not make your payments. If you cannot get a secured credit card, try to have a family member with good credit co-sign on a card or a loan. Be careful with this – if you default on your payments, it will not only reflect badly on your credit report, but your co-signers report as well.

Pay Your Bills on Time
Make sure you pay your rent, utility and insurance bills on time every month. Every late payment is a bad mark on your credit. Don't charge more than you can afford. Try to pay off the balance every month, especially if you have a department store card. If you must use more than one credit card, keep both cards well below their limits. If your bank offers online bill payment, sign up for it. This is usually a far more reliable way to pay your bills and will keep you from having late payments because the check got lost in the mail.

As the credit usage or payment history accumulates, your credit file and credit score should improve over time, assuming you make payments on time and keep your balances low.