How to Build your Credit

What You Need to Know to Build and Maintain Good Credit

Credit is an important responsibility, and that’s why we want to give you the answers to the most basic questions about credit. If used appropriately, a credit card can be the first step toward fulfilling the needs of your business.

Why is it necessary to establish a good personal credit record?
Having credit is important, but having a good credit record is vital. A good credit record will allow you to get a loan for a car or home, for your child’s college education and more.

If you have a good credit record, you could receive better interest rate on loans. Good credit also increases your spending power, allowing you to make major purchases such as appliances for your home, outdoor power equipment, home improvement projects or anything else you might need. Bad credit on the other hand, could prevent you from these attractive rates, and may also prevent you from getting a job.

How is a good credit record established?
Opening a credit card can be a first step. Once you do, you need to use your card wisely to build up your credit history. This means:

1. Use your credit card and consistently pay your monthly bills on time. Over time, this will improve your credit record and you won’t be charged late fees.
2. Pay at least the minimum amount due. If you can, pay more, as it will further improve your credit record.
3. Place a moderate limit on your credit purchases and limit the number of credit cards you have to avoid the temptation to spend.
4. Never miss or skip a payment.

It is also wise to open a checking and a savings account. Lenders and credit-rating institutions see this as evidence that you can manage your money and meet your credit obligations.

How is good credit maintained?

Continue following the steps above to improve and maintain a good credit record. No matter how much credit you are given by different lenders, don't extend your credit if you can't meet the payments.

Remember, regularly using your credit card and consistently paying your bills on time will help you establish a good credit record. This will show lenders that you are responsible with your credit, giving you access to more credit and loans in the future.

What is a credit bureau report?

It is a summary of information about how you pay your bills, repay your loans and how much credit you have available. It is your credit record that lenders use to determine whether they should extend credit to you or your business.

How do lenders decide who is a candidate for credit?

Many lenders use the popular FICO* scoring model. FICO* scores range from 300 to 850. The higher your credit score, the more likely you are to be approved for additional credit. Keep in mind that while many lenders use these scores to help make lending decisions, each one has its own approval strategy. For more details about your FICO* score go to www.myfico.com.

When you apply for business credit, having good personal credit is very important. A business credit card in good standing builds a stronger score and bureau report at Dunn & Bradstreet, Equifax SBFE and Experian—the primary business credit bureau houses. If your business is a proprietorship, partnership or corporation that has been in business less than three years, you will usually need to sign a Personal Guaranty, which is an agreement that you will be paying for your company’s account. If your personal credit is good, it is more likely you will be able to get credit for your business.

Manage or own a business?

Business credit is important because it will enable you to purchase the supplies you need to maintain and grow your business. Business owners often use personal credit cards to manage business expenses, but there are several benefits to using a business-specific credit card.

First of all, business credit cards enable business owners to easily track and separate business vs. personal expenses.

Second, year-end accounting and tax itemization is simplified.

Finally, and in many cases most importantly, business credit cards often provide much higher credit lines than typical consumer credit cards will provide—essential for any new or growing business.

How do I learn more?

To monitor your personal credit history, most experts suggest that you review your credit report once a year. You can order a free copy of your credit report directly from:

Free Annual Credit Reports at 1-877-322-8228
www.annualcreditreport.com

For information on business credit reports, contact:
Dun & Bradstreet at 1-877-753-1444 or www.dnb.com
Equifax at 1-800-685-1111 or www.equifax.com
Experian at 1-888-397-3742 or www.experian.com

What types of credit does Lowe’s offer?

Lowe’s Consumer Credit Card is the easy way to pay for everyday purchases.

Lowe’s Project Card is the new way to pay for major projects.

Lowe’s Business Accounts are the easy way to manage your business.

Lowe’s Business Account offers the flexibility of minimum monthly payments.

Lowe’s Accounts Receivable offers the flexibility to pay by invoice.

_{*FICO is a registered trademark of Fair Isaac Corporation.}