This is a must-read for all those people who are amateurs in the world of credits. Including those consumers recovering after a bankruptcy, new to America, or applying for a credit card, car loan, etc.
If you do not establish your creditworthiness, you will be turned down by lenders or charged a higher rate of interest. In short, life will not be easy for you financially. Building a good credit score requires you to have a credit for at least half year with a minimum of one account updated and reported.
Here are five top ways to establish a good credit record. Let’s have a look at them.
Five Top Ways To Build A Good Credit
Way #1: Open Checking As Well As Saving Account
A good credit holder should give the impression of a financially responsible person. Although the accounts are not directly regarded as credits, the lenders certainly notice them and view them as symbols of stability. Eventually, your account transactions will reveal your responsible nature towards money matters. It shows that you have the “substance” and can save to pay. However, take care not to bounce checks or else it will have the reverse effect.
Way #2: Pay Bills On Time Always
A record of timely and regular payments is the key to a good credit. Even a single late or skipped payment can taint your credit. Here’s a hot tip to ensure you don’t miss any of your payment: arrange for the payment of your bills through automatic withdrawal system from your account. You can also prepare a list, along with their due dates. However, you should be careful with automatic system. If you don’t check your account often, you could get withdrawn and end with multiple overdraft fees posted by the bank.
Way #3: Obtain A Secured Credit Card
This is the ideal way to build good credit from scratch. How to do it? Well, simply deposit a fixed amount of cash at your lender bank. This amount becomes your credit limit. Here, the issuer has no risk because even if you default on payments, they will simply withdraw the money they owe from your deposit, thus, securing your credit limit.
It takes less time to set up a good credit with the help of a secured credit card. Such a card is reported just like a regular one. Once you make timely payments for 12 months with your secured card, you can try for an unsecured credit card. However, stay away from secured cards that demand processing or application fees.
Way #4: Obtain A Student Credit Card While In College
This is a superb way to build good credit. Student credit cards come with flexible eligibility criteria. Even if you don’t have a credit record, you can easily get an approval. However, you must be enrolled for a four-year university course. Once you establish a good credit record in school, you will enjoy an easy road ahead in terms of getting credit. At present, an average student in America leaves college with a burden of around $2,000 as credit card debt and a possession of four credit cards. Do not follow the footsteps of such students. Limit yourself to a single card and pay the full balance every month, if you wish to have a good credit.
Way #5: Never Open Several Accounts At A Time
A good credit cannot be build overnight. Begin with small steps. One or two accounts are okay. Use them thoughtfully for a year. Then apply for more, if needed. Too many accounts in too less time can damage your good credit.
Follow these ways and flaunt a good credit with a few years!
Good Credit It's easy to build a good credit provided you show a sense of responsibility towards money matters.