Credit Building Tips for New Home Buyers

Credit scores are one of the most important public records you carry with you through life and impact nearly every financial move you make. But how do you build a credit history if you don't yet have one? For the first-time home buyer, creating or improving a credit history is often a concern. We've gathered some ways to build or repair a credit profile.

Start with your bank

Having a good relationship with your bank or credit union is one of the best ways to begin or repair a credit history. Though your banking information doesn't directly affect your credit score, building a good record at a bank will make it easier to obtain a bank card.

You can also get a secured credit card or bank loan against a certificate of deposit. With this process, you front the credit for the card by depositing, say, $500 into an account, which links to your card. If you default on payments, the bank takes your deposit. Secured cards are a good option if you are unable to secure credit any other way. Make sure that your secured credit account is reported to the credit bureaus.

Store credit card

These credit cards are easier to obtain than other accounts, and you usually pay the price for it in a higher interest rate. Once you've established a credit history and are able to get approved for cards with a lower rate, you can kiss your store account goodbye, or put it in a drawer for safe keeping. Having a long-term relationship with a creditor, whether or not you use it, is another way to increase your credit score.

Become an authorized signer

Becoming a signer on a relative's existing account allows you to reap the benefits of someone else's good credit practices and establish credit at the same time. Be conscientious though: you don't want late payments from you to negatively impact the person kind enough to add you to the account.

Practice good credit habits

Once you've established a credit profile, start slowly to build good credit habits. Begin with only one credit card, spend only what you can afford to pay off in full each month, and if you have to carry a balance, use only a portion -- no more than 35 percent -- of the credit available to you to keep a good credit score. Now you're ready for the excitement -- and paperwork -- of your first mortgage loan!