How to Build Your Credit Score

money-256319_640Having bad credit can be a hindrance for you to buy a home or car, finance your education or even get a job. If you’re having some financial setbacks and have trouble making ends meet, building your credit score maybe the last thing on your mind. Millions of Americans do have poor credit score but having a strong credit score should be the backbone of your financial health.

With a low or no credit, you could end up paying for more in life’s essentials than you’re supposed to than those who have strong credit. The importance of a good credit score goes far beyond than simply getting a low interest rate. Whatever happened to you financially that made you end up with poor credit today – it’s very much possible to build your credit score. Here’s what you can do.

  1. Check your credit report. This is the first thing you should do to assess your situation. Your credit score provides information on your credit status. Every American has the right to get one free report a year from each of the major credit bureaus. You can try out Cafe Credit also to see what other options are available for you to check on your credit score, free of charge.
  2. Pay your bills on time. This is one of the most important contributors to have a good credit score. Even if your debt is only a small amount, it’s crucial that you make payments on their due date, to also avoid late fees. If you have racked up a huge amount of debt, you should minimize your outstanding debt and make sure that all your accounts are current. Credit report records all payment habits on all types of bills and extended credit. A full one-third of your score depends on whether you pay bills on time or not. Keep track and document all your payments made and also your due dates to avoid missing out on any payment.
  3. Only borrow the amount that you can afford. When you get in the habit of charging only what you can afford, it makes lenders and creditors know you are a financially responsible borrower. If in the future you will need to borrow money or get new credit, you show that you know how to borrow what you can pay back. Aside from that, only charging what you can afford can help you avoid excessive debt.
  4. Don’t close your credit cards – let it age. If you have a credit card that you paid off and you don’t plan on using it anymore, it’s best to keep it open. Closing a credit card will lower your credit score even if you have made payments on time and you don’t have a balance on it. Maintain a history with your credit card provider as it’s also an important factor for a healthy credit score.

It takes time to improve credit scores. If you have negative information on your credit report, it’s best to pay your bills and wait it out. Keep in mind that time is your partner in improving and building up your credit score.

Posted in: Credit and Debt

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