You don’t just “have” good credit, or “receive” good credit… you earn good credit.

So, you have a bad credit score or have no credit to your name. Where do you start? First, find out what your credit score is. Remember, more than one inquiry into your credit score a year will hurt your credit score, except when inquiring for a large purchase (e.g., car loan or home mortgage).

If you don’t have any credit, start below.

1) I have no credit

Ok. Apply for credit. Take what you can get. Try to avoid signing up where you have to pay an annual fee, but if you keep getting denied, sign up anyway. It’s a last resort, and I’d be surprised if you got denied.

Don’t expect to have a high credit limit; you’ll probably be capped out around $500 or less (maybe more if your parents co-sign with you).

2) I have a couple of credit cards… what now?

Build your credit.

But here’s the rule of thumb: Don’t buy it if you can’t pay for it right now.

3) I have a car loan and/or student loan.

Diversify your credit. You can’t get a car loan if you’ve never owned a credit card. It’s just that simple. Prove yourself and establish your credit score, and when you need to get a car, you’ll be able to get a car.

Remember, the better your credit score now, the cheaper you will pay for a car and home later (because of the lower interest rate).

Also, once you build equity (ownership) in something such as an automobile, it will shine bright on your credit score. This also will help you in getting a good interest rate on your home mortgage.

Next,

Maintain your credit. PAY YOUR BILLS AS THEY COME DUE.

Well, if you’ve done all that, I give you credit.

Pun intended.

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