Getting A Mortgage: Establishing Credit
By Gina LaBarbera
One of the keys to getting a mortgage is having good credit, and the easiest way to establish good credit is to acquire a credit card or small loan, and then pay it back on schedule. With a credit card, it isn't enough to simply have it. You must be using your credit card consistently in order to obtain good credit. It can be difficult to get a credit card if you've never had one before, but there are a few easier ways to get started. First, many department stores offer their own in-store credit cards. These are often easier to obtain than a regular credit card. However once you've obtained one of these, used it in the store and then paid your bills on time, this will build your credit. This could take between six months to a year. While good credit with a department store credit card probably isn't enough to get you a mortgage on its own, it does make you more attractive to the major credit card companies, and you shouldn't have trouble getting your application accepted.

If you can't obtain any type of credit card at all on your own, you will probably be able to get one with a co-signer. A co-signer is someone who agrees to be responsible for your debt, should you ever default on your payments. As this is a huge responsibility that requires a lot of trust on the co-signers part, it is best to ask someone who really trusts and cares about you. For this reason, parents or other family members are the most likely co-signers. Obviously, the co-signer would need to have good credit in order to be helpful.

Again, once you get a credit card it is important to use it. But don't fall prey to overspending. The best way to build credit is to use the credit card for purchase you would be making anyway, such as food or bill payments. Then, at the end of the month, pay your bill in its entirety. If you do let a balance remain, be sure that it is no more than 10% of your credit amount. If you owe more than 10 % of your total amount it can through you into a negative credit rating. Keep in mind that it can take a while for the credit bureaus to have all the up-to-date information on your credit rating. Because of this, make sure your credit has been in a positive balance for at least two months before you apply to be pre-qualified for a mortgage.