Building Credit Myths Dismantled

I have had person after person tell me how they got a cell phone to build their credit, or that they pay their utilities/cable bill on time so they know they have good credit. Allow me to add some fact to their fiction, if you are one of those people and have done nothing outside of paying bills on time, let me assure you that you have NO credit. SN: No credit is WORSE than bad credit

The only time a cable bill will affect your credit is if you do not pay, become delinquent, and goes to collections where it is then posted on your credit report.

The payments that affect your credit are those to revolving accounts, installment loans, or real estate.

An example of a revolving account is a credit card. It is a situation in which an entity (most likely a bank) offers you a set amount of money to use when you please so long as you make a monthly minimum payment that will fluctuate depending on how much of the available fund you have used. Term: Never ending  Ending Balance: Current Credit Limit

An example of an Installment Account is an auto loan or student loan. This is a situation where you are given an agreed upon amount of money that must be paid off within a fixed time period via a fixed monthly payment that will not fluctuate. Term: Fixed Length  Ending Balance: 0

A real estate account is of course an amortized loan used for the purchase of real property (land, building, etc). Very similar in fashion to an installment account. Term: Fixed Length  Ending Balance: 0

Overall, if you want to start building credit find a credit card that targets people with no credit.  I have NEVER known of a person to be approved for an installment loan (except federal student loans) or real estate loan with no credit. It will usually take at least a six month period to get approved for an auto loan and a year for real estate.

NEVER NEVER NEVER for personal finance is to never miss the minimum payment on a revolving account!

A great resource for finding more information about personal credit is the Federal Trade Commission.

Here’s a document I found on their site about Building a Credit Report

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  1. Keith Kruger
    Jun.23.2011 - 11:39 PM | Permalink

    I like it! You have a unique name which will work for you and any of your marketing moving forward…I found this right away. Don’t wait to start your real estate marketing. If the biggest problem you have is that you might have to change or modify a website because you’re creating more leadflow than expected, that is NOT a problem and you will HIRE someone to handle it. YOUR time will be more valuable working on the deals and the clients.

    • Gucci
      Jun.24.2011 - 12:37 AM | Permalink

      Thanks Keith! To be fair I’ve had my website up for about a year now, recently gave it a new face and blog. Therefore I’ve had some time to improve the SEO, also using other sites like FB and twitter to assist.


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