 TITLE: An Essential Guide to How Credit Works CONTENT: How to Build Credit\n-------------------\nEstablishing a solid credit history can take time, effort and a lot of patience. Fortunately, however, knowing what goes into your credit score can give you ideas on how to build credit. Ideas include:\n*   **Use credit regularly**: It can be difficult for lenders to know how responsible you are with credit if you never use it. In fact, FICO requires that you have credit-related activity in the past six months to even qualify for a score.\n*   **Establish a positive payment history**: Making your payments on time every month is essential to building credit, so make that a goal. Also, if you've fallen behind on some accounts, try to get caught up as quickly as possible.\n*   **Keep your credit card balances low**: Credit cards are excellent tools for building credit because as long as you pay off your bills on time and in full each month, you can establish a history without ever paying interest. But if you rack up a high balance, it could be a sign that you're overextended financially. Even if your credit limit is only a few hundred dollars, try to keep your utilization rate as low as possible.\n*   **Borrow wisely**: Applying for multiple loans or credit cards in a short period can hurt your credit, and taking on too much debt can make it more difficult to keep up with your payments. As a result, it's a good idea to avoid borrowing unless you absolutely need to. And before you apply, make sure you can afford the monthly payments associated with the new account.\n*   **Keep track of your credit score and reports**: It's a good idea to check your credit score and reports regularly to make sure everything is running smoothly. If you notice a sudden drop in your score, it's best to address it sooner than later. And if you see an account show up on your credit report that you don't recognize, it could be erroneous or fraudulent. If so, you can dispute the tradeline with the credit reporting agencies. END