Building Your Credit Score
April 6, 2023 | Posted by: Sherry Corbitt
Building your credit score is essential for achieving financial success. It allows for opportunities to borrow money at lower interest rates and additionally qualify for larger loans. These are a few tips to build your credit:
Tip 1: Apply for a credit card
This will start to build a relationship with credit bureaus, allowing you to prove your trustworthiness and ability to make payments. Ensure to make your monthly payments on time, it may help you to set a monthly reminder. Furthermore, aim to keep your utilization rate under 20% of your total limit. This signals you have responsible spending habits and will help your score increase faster.
Tip 2: Don’t close old credit accounts or cards
The longer your credit history, the better. Even if you do not actively use the credit available, lenders will be able to view your credit history. Having a short credit history can make it difficult for lenders to assess and may result in a lower credit score. Keeping old credit accounts can improve your credit score by proving you have a history of responsible credit use.
Tip 3: Don’t apply for multiple credit products
Avoid applying for multiple credit products within a short duration of time. This can lower your credit score as it indicates you are taking on significant debt and may default on a loan.
When starting out with a credit card, it is helpful to use it as you would a debit card; never spend more than what's in your account. This will ultimately help you avoid accumulating unnecessary debt while still improving your credit score. Building your credit takes patience, although using these tips will allow you to actively work towards achieving good credit.
Your Broker for Life,