How to Build Your Credit

How To Build Your Credit

Let’s face it, we live in a credit-driven society. If you don’t have credit you can’t purchase a home, automobile, or even get car insurance. Yet it’s not enough to simply “have” credit; your score says a great deal about who you are financially. Building your credit takes time, discipline, and budgeting. Yes, it can be done. Here are several things to keep in mind if you are in the process of building your credit…

Credit Cards-

Secured credit cards are great for first timers and almost anyone who applies will get approved. That’s because the cardholder is required to give a cash deposit for the amount of the credit card limit. Should you default on a payment, the money is there for the creditor to cover what you owe. Retail credit cards are another great way to build credit but often come with high interest rates. Look for cards with no annual fees, introductory “0” interest rate offers, and overall low yearly interest rates.

Installment Loans

Taking out a loan for a home, automobile, or to finance your education requires an installment loan: A loan that is repaid over time with a set number of scheduled payments. The length of time that you will repay on this kind of loan will be determined by the creditor’s loan terms, the amount of the loan, and your credit score/history.

Pay On Time!

Late payments are a sure way to ruin your credit score and put a dent in your credit history as they remain on your credit report for seven years. Payment history accounts for 35% of your credit score. Always pay on time and be sure to make at least the minimum payment required.

Keep Credit Utilization To A Minimum

Your debt-to-ratio (how much of your credit limit you owe) plays a major factor in your credit score- 30% to be exact! It is recommended to keep your balance at no more than %30 percent of your overall limit at all times.

Be In The Habit Of Checking Your Credit Report

Equifax, Transunion, and Experian all offer one free credit report per year. You can obtain these reports for free at Read your report thoroughly to make sure everything is correct as well as monitoring the progress you have made in building your credit.