The Best Way To Build Good Credit

1. Pay all your bills on time and never let your credit card be charged more then 30% of your limit. Even if you have to pay it off multiple times a month. 

2. Get some online monitering system. It can be through a bank, mint.com, or anything. Just so you can see where your finances are. I recommend mint.com but some people have problems with having finances on the internet. Understandable. Just be informed. 

3. Open up some lines of credit and try to be diverse. Department store credit cards are great when you are starting out but if your are really serious about great credit then you need to have a diversified portfolio of credit. credit cards, car payments, personal loans, etc are great ways to build that credit portfolio. 

4. Use someone else's credit. Ask them to add you as an authorized user. This will give you all their payment history for that card. :D

5. Don't get yourself into a lot of debt. A high debt to income ratio is a sure sign of irresponsibility and a lender won't like that. 

To better understand how lending works I suggest you start a Prosper.com account and do some of your own. Now that is a real eye opener. 

How To Buy A House When You Are Young

I just graduated from highschool. I have had a credit card for 4 months. I am going to buy a house. My parents are not cosigning. How?

1. Get some of your parent's credit. Ask them to add you to, at the most, three credit cards as an authorized user. You don't actually have to have one of their credit cards to use but all that payment history will go on your credit record and give you a better score.

2. Take care of your credit. Don't miss payments, max out your card (30% is optimal), or open up to many accounts.

3. Go to your favorite bank and get a CD for any amount of spare cash you have. Then get a personal loan for the same amount and secure it with the CD. This gives you a line of credit with the credit bureau (important) and the CD helps pay off the interest.

Since three lines of credit are optimal for getting a good score you can duplicate this process. Get a CD, borrow, go to another bank, get a CD, borrow against it, go to another bank, get a CD, and borrow against it. That will give you three lines of credit. The bureaus like seeing that.

Note: This method must be done in advance of the house and must be fully paid off. Don't pay off this loan in less then a year, otherwise the credit bureau won't recognize it.

4. Get a secured credit card. It's basically a debit card but the credit bureaus see it as a line of credit.

5. Check with a local real estate agent and see if there are any government grants for first time home buyers. Here in Idaho I can get up to $20,000 for my downpayment. Free. Of course there are some stipulations. You can't rent the house out and for every year that you occupy the house your obligation to pay the grant back is reduced 20%. So it's really more like an interest free loan that turns into free money if you live in the house long enough.

You will also get a better interest rate with the government program.

6. If you are in debt or need to go into debt then try to keep your down payment greater than half the loan value. If you already have the debt work hard to get on the "greater then half" portion of the loan.

Remember. Credit card companies don't want to see use of credit as much as they want to see good management of credit (i.e. don't max out your credit cards).

The best way to qualify for government aid when getting a house is to have an income less then $48,000 and have a very low (read non-existent) debt to income ratio.