Moody's Credit Rating System Section
Moody's Credit Rating System Article
Establishing Credit - Strategies and Guidelines
Establishing Credit may seem like a daunting task to a young person, but a good strategy can help take some of the sting out of the process.
Start by opening a checking and savings account in your name. This alone will not establish credit, but it will get you on the map and provide much needed credibility with financial and lending institutions. Keep accurate records of your checking account balance and make sure to never overdraw on your account. Bouncing a check will send up red flags with potential creditors and diminish the likelyhood of establishing credit. Good credit that is.
With a limited credit history you probably won't qualify for a major credit card yet. Therefore you may want to consider opening a charge account with a large oil company (e.g. Exxon, Chevron, Mobil, Texaco) or a local department store (as long as the store reports to the three major reporting agencies). In general, oil companies and department stores do not impose the rigorous standards of performance as do the major credit card companies. So obtaining one of these cards will be much easier in the beginning.
Another step you can take in establishing credit is to put one or more of the household utilities in your name and pay the bill on time each and every month. Your responsible payment history will be collected by the three major credit reporting agencies (Equifax, Experian, and TransUnion) which will help you establish a good credit rating.
Points to Remember When Applying for and Using a Credit Card:
By following the simple guidelines above, you will eventually prove your credibility. And in doing so, will qualify you for an extended line of credit.
Undoubtably, establishing credit is a process whereby you have to prove to creditors that you are a resposible consumer, have all of your financial affairs in order and you can pay your bills on time.
About the Author: Randy Savage is the owner and webmaster of http://www.the-best-of-credit-cards.com where consumers can easily compare credit card offers. Students can browse through cards at http://www.the-best-of-credit-cards.com/student-credit-cards.html.
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