Good credit is the key to financial security. It is also something that you have to work on. It takes time to build good credit that will be recognized by financial institutions and other lenders. It can be a little easier to build your credit if you are just starting out. It becomes more difficult if you have experienced a financial event that has lowered your credit score, such as the loss of your job or having to file bankruptcy. When you manage your money diligently and always check your credit report continuously, building your credit isn’t difficult.
Obtain a Secured Credit Card
If you don’t have any current credit history, the best way to get one started is to obtain a secured credit card. With this type of card, you secure it with a specific amount of money, usually $100, $200, or $500. With the money loaded onto the card, you can basically use it as a debit card. Since there is no bank account attached to it, however, it is still viewed as a credit card and will be reported as such to the credit bureaus if you use it to pay bills or make online purchases to companies who report their transactions. Continue to use it and reload it regularly and your credit history will grow.
Pay On Time
Paying your bills on time will also help you build your credit. All of your bills, from your utility bills to your credit cards and car loans, will at some point report payments to the three primary credit bureaus. In most cases, delinquent payments to utility companies are reported much more promptly than those that are paid on time.
Pay More Than What Is Due
If at all possible, pay more than what is due. This takes money off of the principle and will lower your debt to income ratio and improve your overall credit rating. It will also pay your loan or credit card off faster while paying less toward the interest. Even if it is only a few dollars extra a month, the savings will add up over time.
Pay Small Balances Off Each Month
If you have small balances on your credit cards, pay them off every month. Even though carrying a small balance on one or two cards will help you build your credit. Paying them off each month will accomplish the same goal and eliminate paying any interest. You will save money and build your credit at the same time. It will also help you build solid habits when it comes to saving money and paying your bills on time.
Check Your Credit Reports For Accuracy on a Regular Basis
Check your credit report at least once a year to ensure that the information is accurate. If it’s not, you will want to file a dispute and notify the company that reported you to the credit bureau. It may be a simple clerical error or someone could have stolen your identity. Either way, correcting the problem as soon as it is uncovered is the best way to keep your credit report on point.
If you are looking for a credit builder, start with your credit reports. Going over each one thoroughly will show you areas where you may be able to improve. Clear away old accounts by asking the company to remove them. Focus on improving your spending habits and repayment skills. Try to find ways to save a little extra money each month. You can also look online for free credit reports and utilize the apps. Use any tool you can and before long, you will have your credit back on track.