If you’re just getting started in the world of credit, it can be hard to know where to begin. How do you build credit, and what exactly does that mean? The answer can seem a little complicated at first, but building a strong credit score is actually fairly straightforward.
A good credit score will help you qualify for loans or other types of financing in the future.
5 Ways To Get The Best Credit Card
You might have heard that having bad credit can make renting an apartment or getting cell phone service very difficult; fortunately, that’s not really true.
|5 Ways To Get The Best Credit Card – Allowing You To Build Credit|
Even if your current situation doesn’t leave you with many options, there are several simple steps you can take today to build a strong credit profile tomorrow. With that in mind, here are five ways to build excellent credit:
Way 01: Know Your Credit Score
The first step towards building a strong credit profile is knowing what your current situation is like. You can track your progress by reviewing your credit report, which is a free service offered by each of the three credit reporting bureaus —
Experian, Equifax, and TransUnion.
You are entitled to one free credit report per year per bureau.
You can also sign up for free credit monitoring to keep an eye on your credit report and make sure it stays accurate. If there are any mistakes, you’ll be able to correct them sooner.
Credit scores are based on a number of factors, but generally speaking, you want to aim for a credit score in the mid-700s. Trustworthy lenders like banks and credit unions will often use a credit score as a sort of sliding scale: the higher your score, the better your terms will be.
Way 02: Get A Confirmed Credit Card And Use It Responsibly
Credit cards are one of the best tools for building credit. If you’re over 18, you can start the credit-building process by applying for a credit card.
Opt for a card that reports to all three credit bureaus, such as a secured card. These cards will usually require a deposit (typically around $200) which will act as collateral if you don’t make your payments.
This is a good thing: it means you’re less likely to default on your payments, which will help you build a long-term positive credit history. Credit card companies will typically report new accounts for a positive credit history after about two months, so make sure to pay your credit card bill on time.
If you can make a small payment every month, even better. If you’ve had a credit card for a year without making a late payment on it, that credit card account should be reported to the credit bureaus.
As long as you use it responsibly, having a credit card can be a great way to start establishing a positive credit history.
Way 03: Monitor Your Credit Report And Stay On Top Of Any Changes
You have the right to see a copy of your credit report annually at no cost. Take advantage of this right and review your report for any errors.
If you find an error on your report, report it to the credit bureau and they will investigate. Once you have a credit report, stay on top of changes to it.
Credit bureaus are required to provide you with a free credit report once every 12 months. You can also sign up for free credit monitoring services to stay on top of changes at all three credit bureaus at the same time.
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If you see a change on one credit bureau report but not the other two, the most likely cause is a mistake. Contact the bureau to dispute the change and have it corrected.
If you find a change that isn’t a mistake, it’s best to deal with it as soon as possible. This might be a new account that you didn’t open, a payment that you missed, or an account being reported with a different amount than you expected.
Way 04: Pay Off Debt And Don’t Charge Anything New
Credit card companies need to know that you can pay off your debt
- — or at least make a good faith effort to pay off your debt
- — before they will give you a higher credit limit or provide you with a line of credit. You can use this to your advantage by paying off your existing debt as soon as you can and not charging anything new.
If you have existing debt, remember that you are better off paying off your credit cards than trying to dodge them altogether.
Credit card companies have powerful methods of extracting money from people who don’t pay their bills, but they can’t do anything to you if you pay off your credit card bill every month.
Way 05: Make sure to start by knowing your credit score
Building a strong credit score is not something that happens overnight, but it is an important task that everyone should try to accomplish.
Make sure to start by knowing your credit score, getting a credit card, and paying off your current debt. These are just a few of the ways you can start building a positive credit score.
Moreover, a strong credit score will allow you to get better loans in the future.
It’s never too early to start practicing good habits that will carry you through the rest of your financial life. With a little time and effort, you can greatly improve your credit score and your long-term financial outlook.