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5 Keys to Building a Credit History

We all come from our own circumstances, and when it comes to building a credit history, that tends to make a difference.

For example: if you’re young, or you’ve just recently arrived in the United States from someplace else, establishing the kind of credit history that will allow you to rent an apartment, finance a car, or successfully apply for a job can be tough…

You need a good credit history to qualify for almost everything.

To help ensure that your credit history ends up where it should, have a look at the following tips for building one the right way — and then enjoy the benefits that a strong report and score can bring to you.

1. Open bank accounts.

Open a checking account and practice using a debit card, says Kimberly Rotter, a debt-management expert for manilla.com and a personal-finance writer. “Open a savings account and make a commitment to add to it every month, at whatever level you can afford, even if it’s just a few dollars. Don’t miss a payment. If you’re coming here from a cash economy, these two tools will become your financial foundation in the U.S. And establishing a relationship with a bank or credit union is the first step toward more complex financial transactions like obtaining a credit card or a loan.”business man holding piggy bank

2. Use a business credit card (wisely).

Business credit cards can provide new entrepreneurs — whether young or recently arrived — with a way to build positive credit histories, says Rohit Arora, CEO of Biz2Credit.com. Arora moved from India to the U.S., in 2003. “Open a card in the business name, and pay it off promptly in full every month,” he says. “Check your business credit reports periodically to make sure there are no discrepancies.”credit card held over a laptop

3. Pre-pay bills.

Some vendors will offer cash discounts for advance payments, Arora advises. “Also, if you pay promptly,” he says, “people are more willing to vouch for you as a credit reference.”buildcredit4

4. Get help early on.

“Don’t try to learn by osmosis,” says Rotter. “Your bank or credit union will have some free education, either online or in person, and if you don't understand English, go into a branch and talk to the manager about getting help in your language. The National Foundation for Credit Counseling also offers free and low-cost financial education. Some larger employers provide free guidance as part of the Employee Assistance Program, and some community colleges offer free personal finance courses.”crossroad between good credit and bad credit

5. Be Patient.

“Building great credit takes time, for everyone,” Rotter says. “A decent score can take two years to build, and a great score even longer. Part of your credit score is based on the average age of your accounts, so being new [to the credit-building process or] to the U.S. is, in itself, a mark against you. The most important thing is to pay your bills on time and avoid debt. The score will come.”plant growing out of a pile of coins