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You are here: Home / Our Tips / Credit 101: How to Establish a Credit History Without Getting into Trouble

Credit 101: How to Establish a Credit History Without Getting into Trouble

October 6, 2021 By Ralph Gates

If you are like most of us, you have goals and dreams, which may include buying a home, a new car, or even taking an amazing trip around the world.

If you are planning to do any of those things (congratulations!), it is crucial to work on building your credit history now when you are young, so when lenders contact the credit bureau, they will see your efforts to establish a credit history and consider you loan worthy. This is the sure-fire way to reach all of those financial goals!

Why Credit History is Important

Everything you want to buy on credit will be based on your credit score. A good credit score will determine whether you will get the loan, the type of loan, as well as what interest rate to charge for the loan. A lack of credit history, however, can cause the lender to deny the loan or cause you to get stuck with a (much) higher interest rate since you are considered to be a “risky” loan.

Here are some of the main reasons why it is important to establish a credit history.

Top Reasons to Establish Credit History

·   Having a good credit score is a measure of how “good” of a loan risk you are. It tells lenders that you tend to fulfill your loan obligations.

·   Responsibly maintaining your credit history means you will receive approval letters from lenders versus being denied credit.

  • Those who have a good credit history will qualify for better loan options and interest rates – saving you potentially thousands of dollars in interest payments.
  • Building your credit score to reach over 660 is a sure way to get approval on a mortgage.

What Can I Do to Get a Credit History?

Sometimes it can be tough to build your credit score when you are first starting out and don’t have a credit history. What can you do when mortgage companies, credit cards, banks, and other lenders require this history? Here are a few pointers about how to get started on building your credit history so that you can get loan approvals, including a mortgage for your first home.

How to Build Your Credit History

  • Authorized User – Becoming an authorized user on a parent or relative’s credit card that has already established good credit history is a good place to start. Be diligent about making the payments for your purchases and watch your credit score grow.
  • Secured Credit Card – Apply for a secured credit card to establish your credit history. The application process is the same as with a standard card. Secured credit cards offer a very low credit limit, and you are required to deposit the amount of the card’s limit for approval. The lower limit means that you won’t get into trouble racking up a large balance, and once you make several on-time payments, it may be converted to a regular credit card.
  • Credit Tools – Experian, one of the major credit bureaus, offers a program called Experian Boost, which will allow you to get credit for monthly bills you pay on time. Expenses like phone bills, utilities, and even streaming services can help establish and build your credit score.
  • Credit Builder Loan – When lack of credit is a concern, consider applying for a credit-builder loan. This type of loan is designed for people with no credit history as a way to establish good credit and an on-time payment history to prove you are trustworthy for future loans.
     

Are You Ready to Build Your Credit Without Getting Into Trouble?

Once you have used these tips to start building your credit, it is a good idea to apply for your first credit card. With a little discipline and a conservative-spending approach, you will be well on your way to building your credit and owning a new home, car, or jetting away on the vacation of your dreams!

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Filed Under: Our Tips

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Mid America Mortgage Services, Inc, NMLS #1142067
200 E Walnut St.
Columbia, MO 65203

Phone: (573) 875-1100

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"When we were 18 and 19 years old no one wanted to help us get started. But Michelle took us under her wing 6 years ago next month. There is a lot of people out there that could of taken advantage of us many of times because we had no idea what was going on. For Michelle to stand beside us and walk us through, and not let us get into something that could get us in a lot of trouble means the world. We thank Michelle and we are extremely blessed to be able to work with her and her team. I have never even thought about talking to another lender and will always be loyal to Mid America Mortgage Services, Inc."

Cody and Morgan

"One of the main things that I loved about Michelle was she was so organized. She would meet us at any location she needed to, and to be honest she had the absolute lowest interest rate. They were always very transparent with fees so there were no surprises. Michelle was always super easy and we would always run in talk to her even it was for a few minutes. The best thing was the process was very, very smooth."

Chris and Jamie

Selling our home of 17 years and building a new home was a very emotional time for our family. We were ready for the next adventure in our lives but knew there were numerous steps involved. The search for a mortgage officer was simple, Michelle was our choice. Her guidance and knowledge made the process as easy as possible. When we had questions, she was always there to give us an answer and discuss our options. The employees of Mid America Mortgage Services, Inc like Michelle will keep us returning for our mortgage needs.

Chad and Julee

"I’m a very loyal customer at Mid America Mortgage Services, Inc. I have an addiction to building houses and designing them, and they are always right there with me every step of the way helping me get the best loan product and the best rates whenever I am ready to build. They make sure you don’t get a loan that you can’t afford. The whole process was very smooth. I would recommend Mid America Mortgage Services, Inc to anyone because they are always there to teach you, help you, and make it easy for you every step of the way."

Kate

"My wife and I have moved around quite a bit with my job so we have been through the process before, but we have never had anybody help us as much as Michelle West Mid America Mortgage Services, Inc did. We needed a loan for a new construction home and they were able to help us out with all of our needs and make us feel comfortable with what we were doing moving forward. They did a good job of walking us through the paperwork to make sure that we were pre-approved for a certain amount."

Jason

"I have had mortgages since 2004 in Columbia and have gone through a couple of banks, but over the last several years, the last couple of houses have been with Mid America Mortgage Services, Inc. Michelle has told us many times, 'I am not going to put you in a situation I am not comfortable with you being in, regardless of what it means for our company'.

Heidi always has a smile on her face and when you walk through the door, they recognize you and say “Hi”. I definitely recommend anyone who is in the home buying, purchasing, refinancing, upgrading business to go to Mid America Mortgage Services, Inc, ask for Michelle because they are going to be the best person you can work with."

John

Michelle, I want to thank you for all of your efforts on the loan. I never knew how much information the needed! I appreciate your personal nature and ease of working together. Thank you for making this happen! :)

Amy

"My family owns Tiger Ice Company. My experience with Ralph at Mid America started with Tiger Ice because we needed to expand our facility. When we went in to talk to Ralph at Mid America, he pretty much was straight up with us and told us we needed to go back to the drawing board. We came back with new numbers and a new plan, and we built the facility and everything was fine. Our dream of that would not have been possible at all without Mid America Mortgage Services, Inc and Ralph. They don’t tell you what you want to hear, they tell you the truth and that's what we weren't getting from other banks."

Andy

"I knew Jeanie Byland for a long time. She made the process so easy. One of the things I probably appreciated the most was that she didn't want to spoil the excitement of closing on a new house by showing up on closing day finding out that we owe a lot more than we thought. They were upfront with that information right from the get-go, and that’s because it’s just like they say, ‘They wouldn’t put you in a loan that they would be comfortable taking themselves.’”

Jamie

"They really explained the process to us very well and made us feel very comfortable, specifically Jeanie Byland. I have never asked a question that I felt dumb about. They really wanted to educate us and have been fantastic. The interest rates changed one day and they called me to say, ‘Hey we might ought to look into refinancing your loan’. I really felt like they had our best interest at heart."

Steve


Phone: (573) 875-1100
200 E Walnut St, Columbia, MO 65203

 

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