It is important to understand that not all creditors report to any of the three CRAs or Consumer Reporting Agencies. So your local business purchase on installment payments may do nothing for creating a positive credit history. If you do purchase on time from a local business, ask if it reports to any of the CRAs: TransUnion, Equifax, or Experian.

Credit Histories the Mortgage Lenders Want to See

Do you have at least one major installment loan, either open or recently closed within the last 12 to 24 months? Installment loans are loans that are given a specific time period and are being paid down monthly with the same required payment. Auto loans, mortgages, and other big ticket items are of that category.

Revolving credit is open ended. It is usually a credit card or even a home equity loan that allows you to take out money as needed and pay a minimum monthly amount. Open credit cards with a zero balance will still show on your report and be considered valid credit histories if the card was used.