Good credit habits needs to be established early on.  A lender will look at your payment history to determine whether they are willing to extend additional credit to you.

Establishing Credit:

The most common way of establishing credit is by opening a credit card account.   If you pay the balance on your card each month you normally won’t be charged a finance charge.  If you use your account to make a larger purchase.  Make a plan to pay it off within a reasonable amount of time before making additional charges to that account.  Credit cards a fairly easy to obtain.  Your headed for trouble when you start to open new credit card accounts because you are up to your maximum on your existing accounts. 

You Have Rights:
The Equal Credit Opportunity Act protects an individual from being denied credit due to sex, marital status, race, color, age religion, national origin or because you are receiving income from a pubic assistance program.  The law indicates that you will be evaluated fairly.  Creditors are required to consider alimony and child support payments as income.  A creditor will need payment verification from the sources.  If you consistently deposit the checks you receive, to the same account each month, a lender may use the statements as verification.  Creditors cannot discourage individuals from applying for credit because of marital status or sex.  A creditor may not pass judgment because they think that you may be retiring soon.  They may not close an account or change the conditions on an account because you change your marital status.   However, you may be required to reapply on your own, based on your own abilities, if a change does occur.

When Is Less Better Than More?
On one hand you need enough credit to establish a payment record.  On the other hand don’t go over board and apply for every credit card that is offered.  If you have a lot of opened accounts on your credit report with balances, this may work against you.  You may be overextended or appear to be an abuser of credit, even if you make your monthly  payments on time.  If your wallet is lost or stolen, you will have to contact each creditor.  (Your limited liability for credit cards are normally up to $50 per card.)

Get a Credit Report
One thing you should periodically check is your credit rating especially if you have been denied credit.  If you have been denied credit within the past 60 days or you are unemployed the credit reporting agent is required to give you a free report.  The most commonly used credit reporting agencies are Equifax (800-685-1111), Experian, formerly TRW (888-397-3742 and Trans Union (800-916-8800).

If There Is an Error On Your Report:
If you notice any erroneous derogatory credit, immediately contact the credit reporting agency for corrective action.  The credit reporting agency is required to reinvestigate questions in a reasonable amount of time, usually 30 days.  When the investigation is complete the results will be sent to you in written form.

Be Up Front When Applying for Credit
If you actually have derogatory information reported to your account due to extenuating circumstances, it is to best to be up front when applying for a loan or other credit.  Explain in written form of the situation.  If you purposely omit the information and the lender finds out.  The lender will wonder if you have omitted any other important information.

If Things Are Out of Hand:
If there seems like there is not solution, the debts keep piling up and the creditors keep calling, you might want to contact the Consumer Credit Counseling Service (800) 388-2227.  They are a non-profit organization and do not ask for a fee for services.  They are trained professionals and can help you set up repayment of your debts or negotiate with your creditor.   They will set up a schedule with your creditors.  Instead of paying your creditor, you pay the Consumer Credit Counseling Service directly and they appropriately divide it according to the plan.  It’s always better to try and correct the situation yourself, but if you aren’t making any headway this is certainly an alternative you should consider.