Everything You Need To Know About Credit History

How much do you know about the Great Depression? The reason we’re bringing it up is because those who lost everything swore off ever taking on any loans ever again and taught the evils of credit to their offspring. While they may be right about a few things, your credit history could suffer if you follow their (well-intentioned) advice.

Having a no credit history in today’s world is almost as bad as having a bad credit history. With bad credit, lenders can at least see a consumer’s spending behavior improve, but with someone with no credit history, they have no way of determining whether you’re great with debt or you pose a risk.

What we’re going to help you do in this article is show you how to quickly build a strong credit history fast and start benefiting from the interest of future lenders.

Credit History Tip #1: Get a credit card through your bank

All Canadian banks offer credit cards for their clients to use. You’ve probably already been offered one or two here and there. Perhaps it’s time you finally take them up on the offer. Typically, if you don’t have any credit history to work from, you’ll be offered a credit card with a higher interest rate (around 19.99%).

The key to beating that high rate of interest is to carry as little of a balance as possible. Now this is where the credit history building begins.

Stop paying for your bills with cash (or digital cash). Start timing to have all of your common, recurring expenses such as utilities, phone, cable and even groceries and cash and get in the habit of constantly paying your balance.

This way, you’re still accomplishing what you were with cash, however, with a credit card, you’re building a strong credit history that lenders can actually track and refer to.

Credit History Tip #2: Try a store card

Store cards have one of the lowest barriers to entry and that would be a great way to start building a credit history. For example, imagine that you had saved up enough money for a new entertainment centre for your basement.

Sweet – but why take that large sum of cash and make an expensive purchase without getting rewarded for your financial prudence? With the low limit set on the store card, you might not be able to pay for your whole centre, but if you buy it piece by piece and immediately pay off the balance on the card, you’ll be looking pretty good.

Credit History Tip #3: Don’t give in to temptation

If you’ve avoided credit cards believing that they’re a waste of time, don’t go making the mistake of going the other way once you do get a credit card. Far too often has been the case that someone getting their first credit card is easily lured into the temptations of being able to instantly purchase everything.

If you’ve spent years always financing all of your purchases with cash and then realize that you can buy so much more with a swipe or click, you could start down a slippery slope – so just make sure that once you do get your credit card, your positive money management skills don’t change.