5 Steps To Build Credit History
Building up your credit score can seen daunting, here are 5 tips to help you start building credit now.
From home mortgage and car loans, to job offers and qualifying for rentals, your credit score is a crucial factor in your financial future. There’s no time like the present to start or continue building your credit report and improving your score!
Step 1: Know Where You’re Starting
It’s tough to know what to do to improve your credit score if you don’t know where you stand, so the first step is getting a copy of your current credit score and report. You can obtain your report from one of the major reporting bureaus: TransUnion, Equifax, or Experian. There is usually a small fee associated with getting your score.
Step 2: Check For Accuracy
Make sure your personal information, accounts, employer, and all other information is accurate. If you notice any mistakes or anything out of the ordinary, it’s important that you contact the credit bureau to correct any errors, including things as simple as an old address or incorrect employer information.
Step 3: Open Credit Accounts
In order to begin building your credit score, you’ll need to open a few lines of credit. This could done with a bank-issued credit card, gas cards, department store cards, or other similar lines of credit. Be sure to pick accounts with minimal or no annual fees.
Step 4: Spend Responsibly
You don’t need to use your credit cards for large purchases to start building up your credit history, all you need to do is use your card for small purchases and make sure to pay it back by the monthly due date – and never miss a payment! Try to avoid using your full credit limit, as your credit-to-available-debt ratio also factors into determining your credit score, and having more credit than debt is a good thing.
Step 5: Monitor and Close Accounts
Once you’re on your way to building up good credit, it’s important to keep an eye on your report. If you have unused cards and accounts, maybe ones with high interest rates or fees, you may choose to close these accounts. When deciding which ones to close, keep in mind that your credit history length is preserved by the oldest card you maintain, so you may want to keep your oldest card and close ones with shorter histories.
Bonus Step: Be Patient
It can take months to build up your credit report, so remember to be patient and continue using your credit responsibly over time! A good credit score and report can help you in all sorts of financial ventures throughout life!