Building Credit

Building

Establishing credit can be done in a variety of ways by paying bills on time and monitoring your credit score, but I will touch on that basis later. You may already be taking actions that affect your credit score without knowing it. Those actions may include but are not limited to paying your utility bills on time or keeping a low credit card balance, which can positively influence your credit. Similarly, missing payments or racking up high balances can hurt your credit. When you are ready to start building credit with a credit card, make sure you apply for the right type of card. If you are trying to build credit as a college student, consider one of the top credit cards for students. If you have a car, fuel expenses are already a part of your spending—and gas credit cards help you use those purchases as a foundation for building credit. According to Creditkarma.com you could even build your credit score with a retail store credit card. Retail credit cards often come with high interest rates, but they are available to people with less-than-perfect credit. That makes store cards a good starting point for people who want to improve their credit history. While you are establishing credit, it is important to know how to build a positive credit history. Having a good credit score opens the door to lower interest rates and better opportunities for loans and credit in the future. Here are some good credit habits that can help you build credit more quickly: PAY BILLS ON TIME Since your payment history makes up 35 percent of your credit score, it is important to pay your bills on time. If you accidentally miss a payment, contact your credit card issuer, and make up the payment 30 days before it is past due.

MONITOR YOUR CREDIT REPORT Keep a watchful eye on your credit report so you can monitor your financial habits and dispute any errors you find. It is also a clever idea to keep track of your credit score—there are many ways you can check your credit score for free. KEEP AN EYE ON UTILIZATION To boost your credit score as quickly as possible, try to keep your balances below 30 percent of your available credit. If you have a credit card with a $1,000 credit limit, for example, that means keeping any revolving balance below $300—and it is even better if you can pay your balance off in full every month. Darnell Wright BuildingCredit DON’T APPLY FOR TOO MANY NEW CREDIT ACCOUNTS AT ONCE Applying for multiple credit accounts at once is not always a good idea. Not only will the back-to-back credit inquiries lower your credit score, but lenders might also turn you down simply because you have applied for too many credit cards within a brief period.

AVOID UNNECESSARY CREDIT INQUIRIES If you

are considering a new credit card, try not to waste credit inquiries on applications that are not likely to be accepted. Instead, look for credit options designed for people with your credit history and background.

KEEP OLD CREDIT ACCOUNTS OPEN Try to use each of

your credit cards at least once per year to prevent lenders from closing your accounts due to inactivity. If you have an old credit card that charges an annual fee, consider downgrading your card to one with no annual fee—that way, you can keep the line of credit open and continue to build your credit history.

Continue to practice responsible credit habits, and you can look forward to higher credit limits, lower interest rates, better credit card rewards and all the other financial benefits that come with building good credit.