The way to establish a good credit score can be a bit of a mystery if you're just starting out. Here are some helpful tips.
There is the general rule of "twos” that lenders want to see when looking at a credit report, which is:
- 2 trade lines
each with at least a minimum
- $2,000 credit limit
for
- 2 years
Examples of trade lines are:
- credit card
- car loan
- student loan (that’s in repayment)
A cell phone bill isn’t usually considered one of the trade lines because there is no credit limit. Although, it can be used to strengthen a credit file.
I like to also point out that we don’t have to just use the credit report when showing that someone has a good credit history. Encouraging a young person to go into debt may not always be wise advice. Lenders can also use 12 months of bank statements that have monthly on-time rent payments and vehicle insurance payments and/or cell phone payments, which most young people will have before they establish a good credit report.
If you'd like to discuss this further, please give me a call at 780-720-5185.
