There is no doubt that building your credit score takes time and effort, but there are some steps that can be taken to make it easier.
Here are six steps you can take that will help you build a solid credit history.
Review your credit file
Although you may believe you have no credit, all things considered, you may be right. Nevertheless, it is advisable to check your three credit reports for confirmation.
It is not uncommon to find mistakes on credit reports, even when you think you do not have any accounts on your reports.
Get new credit
Taking the first step toward establishing a good credit history is opening new accounts that will be reported to third-party bureaus.
An example might be a secured credit card, a regular credit card, an auto loan, or even a home mortgage.
One way to boost your credit score is by combining different types of accounts While it may seem strange to have debt in various forms, it is a sign of reliability, provided you are paying your bills on time.
Pay in full, on time
Paying on time or early is the most important factor in calculating your credit score.
Make sure to keep track of all credit card and loan balances, as well as your pay dates. Whenever possible, it is ideal that you make your payments on time or early, ensuring that your balance is paid in full every month.
Watch your limits
When it comes to having a credit card, it is best to keep your utilization rate at or below 30% and above 0%. Use it but only about a third of your available a credit in any give cycle, then pay it off.
Too much credit utilization can harm your credit score. If you need more flexibility you can always request an increase in the limit from the bank.
Keep old credit alive
Keep in mind as well that you should avoid getting multiple credit cards within a short period of time.
However, it is important to keep old credit cards open even if you are not using them any longer. This will help increase the age of your credit history.
Again, if you need credit, contact your existing financial institutions and see if you can get higher limits.
Check reports often
It is always a good idea to obtain a copy of your credit report every six months to see where you are at and where you want to go from there.
You should not overlook the possibility that there might be errors seriously affecting a credit score.
If you notice any, you should notify the credit agency, which typically means explaining in writing what is wrong and providing supporting documentation.