by Pennee Struckman

Created on: August 23, 2009

Building credit scores in traditional society requires obtaining credit and making timely payments. The easiest way to start your credit history is to apply for credit cards. Store cards are the simplest to obtain, and pave the way for VISA, MasterCard and Discover. As you make the payments on time, your credit score grows, and you will be able to obtain a car loan. The downside to this is the increase in credit card limits, making only the minimum monthly payments, and the growing credit card debt due to ease of purchase and high interest rates.

Building credit can also be accomplished using non-traditional methods. These methods, however, require the same responsible debt management as building traditional credit. However, using a non-traditional approach will ensure that you do not lose track of how much you owe.

To build credit without using credit cards, there are several options, some of which are also used by traditional credit bureaus.

The company that compiles the FICO credit score has developed a new Expansion Score, which takes non-traditional payments into account. The Expansion Score uses utility payments, rents, and other recurring debt and tracks the timeliness of these payments. The new scoring system also looks at the bank account, to see how many times insufficient funding has occurred.

An individual can also build their credit score by using Payment Reporting Builds Credit, PRBC, an alternative credit bureau that uses the Expansion Score, builds a credit file based on regular maintenance payments, such as utilities, rents, and other recurring bills, and provides a credit score. These is a fee-based credit bureau that will produce the report based on information entered, and help the consumer set up automatic payments.

Establish a relationship with your bank. Although credit bureaus don't normally look at the bank account, managing your funds on your account can prove to your bank that you are responsible. This will be useful when obtaining a loan for an automobile, or a signature loan for another purchase.

Employment history will help build your credit. When applying for a loan, the credit bureaus look at your employment history to establish that you are employed, and to measure your longevity. The longer you have worked at one job, or in one professional, the more positive the credit bureau will be.

Creditors also look at how long you have lived at your present location, and how long you have lived in one place in previous

• 1
• 2
• Next Page >>