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In this article we are going to talk about how to establish credit for the first time. If you are a teen or a parent wanting to help their teen establish credit so they can get car loans, college loans or just have a good credit rating, then this article is for you. By following these steps to establish credit, a young adult can have an excellent rating by the time he or she turns 18.

Studies in Canada say the average score is around 720… I have been lending for over 10yrs now and find that statistic high! In Mortgage Brokering we can provide preferred rates for anyone having a score of 680 or higher but many times the Lenders will allow a score of 620 for BEST RATES. Have a higher credit score means that you have more negotiation room with your Lender on interest rates. Don’t fret though many people are working on trimming their Credit Bureaus and shaping up to get credit a Healthy Score. CMHC (Canada Mortgage Housing Corporation) has a minimum requirement for Beacons of 600.

We can request a copy of our credit file for free from the major credit reporting agencies – Veda Advantage, Dun & Bradstreet or Tasmanian Collection Services (if we are Tasmanian). This will be provided within 10 working days – or for a fee it can be provided urgently.

Moving/traveling: If we move around a lot, the danger can be ending up with defaults on our credit rating due to unpaid accounts we were not aware of. Typically an account gets sent to our previous address and remains unpaid and then listed as such on our Max credit score file. We should consider a P.O. Box for all our mail or alternatively a parent’s address.

Even though, credit is very important to have, you need to use it wisely and frugally. Do not let your debt surmount and become train wreck in the making. Many people experience these types of problems with credit cards. They forget that a card does not work like a raise from your boss. A charge card is not an extension of your income and should only be used in times of emergencies and for important large purchases that you can otherwise not afford. Furthermore, in order to maintain good credit you will need to keep your debt versus available credit ratio no more than 30%. That means that if your credit card grants you $10,000 in credit you should only spend no more than $3000 on that card. Those who exceed this ratio will run the risk of damage.

It is possible to add an explanation to your credit report to give additional information about the circumstances of any items that appear negative. Falling behind on a payment may have a very good reason. Adding the reason to your credit report makes it more accurate and may help you if you are applying for a loan.

As you can see there are simple steps you can take on your own to achieve the results you are looking for. If you don’t have the time and energy or you want a professional to dispute the derogatory items on your credit report for you, then I urge you take action and get started today!