Your credit score matters more than almost any other number in your life. Life is simply more affordable when you have a high credit score. You get lower interest rates, better terms, and you have more financial freedom. A high credit score means you get to buy a more amazing home, a better car, and you pay less than other people whose credit is not up to par. If you’re looking to create a credit score for yourself or simply improve the one you have, these tips are invaluable in terms of providing for your financial future.
Get a Loan
Even if you don’t need one, a starter loan like those offered by Western Shamrock Corporation is a great option for you to help build credit. This loan should be a small one. Repay the loan as quickly as possible. Don’t repay it all a month later, but do make larger than necessary payments over the course of a few months to show you are a responsible borrower. It helps build your credit.
Schedule Automatic Payments
Making payments on time is the single most important thing you can do when you’re building your credit. Every late payment is detrimental to your credit, so start scheduling those payments to come out of your bank account automatically. You can schedule most payments to come directly out of your bank account in the form of an ACH payment. You can schedule them to come out as an automatic payment using your debit or credit card, too. This helps to ensure you don’t get too caught up in life you forget to make a payment while on vacation or when an emergency arises.
Keep Credit Utilization Low
A simple way to keep your credit score high is to utilize no more than 30 percent of your available credit. For example, if you have a credit card with a $1,000 limit, never carry a balance of more than $300. This is the magic number credit bureaus use to ensure you’re a responsible borrower. It’s all right to spend more than this using your card, but you must pay off the remaining balance every month to keep the utilization ratio low.
Never Carry a Balance
The best way to ensure your credit is great and your debt-to-income ratio is low is to keep your cards clear and avoid carrying a balance. While it’s important your credit utilization ratio at is at or below the suggested 30 percent, it’s even better for your credit score if you use your card monthly and pay it off in full. Not only do you not have credit card debt when you do this, but you also avoid paying interest on your everyday purchases. It’s more affordable.
It takes longer to elevate a credit score than it does to lower one. One of the most helpful things to do to ensure your credit score is growing rather than falling is to keep an eye on it. Utilize your right to secure a free credit report every year from each of the major credit bureaus. Stagger pulling your reports to quarterly. This helps you keep an up-to-date eye on your report, so you’re able to find mistakes as quickly as possible. If you do find a mistake, report it right away to the bureau. They will fix it immediately, which doesn’t give it time to affect your score or your financial life.
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