What is "Established Credit"

"Established Credit" is a term which often refers to 3 to 5 pieces of credit maintained for at least 2 years.

Items such as utility bills, rent-to-own accounts, and insurance are NOT usually reported to your credit report, and thus would not be "established credit".

It is best to have a variety of credit accounts which include but are not limited to car loans, revolving accounts (credit cards), and mortgages.

Few consumers realize that the underuse of credit can have as much of a detrimental effect on your credit score as the overuse. The key is to show a pattern of using credit, but using it in a manner that is responsible.

In additon, no discussion of establishing credit is complete without mentioning how important it is to "re-establish" your credit and maintain it responsibly after a bankruptcy.

There are many ways to establish credit. You can open up credit card accounts, take out automobile loans, take out personal loans, etc.... By opening up your own credit accounts you will be establishing credit. A quick way to help you to establish credit is to consult with a family member or close friend and see if they would mind adding you to a credit card account of theirs. By having yourself added to their account you will gain their credit history on your credit report. Therefore, having someone add you to their credit card will only benefit you if they have good credit and the credit card company will report to your credit report as well.

If you have good credit and want to look out for your kids, as soon as you can, add them as authorized users, they will develop very high score credit files...

» DISCLAIMER: The information contained in this article on 'What is "Established Credit"' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.