Building your credit score back up can seem a daunting, overwhelming process — but it doesn’t have to be. Here are 4 things that build your credit up fast!
In 2018, the average FICO credit score was 704. Although this number is a “good” number, 19 percent of the population still has credit scores below 600.
If you don’t have the credit score you desire, it might feel like your possibilities are limited. Not having a good credit score can keep your interest high or prevent you from making larger purchases.
Are you interested in learning how to build your credit? Check out these 4 easy tips.
1. Make All Your Payments on Time
The best thing you can start doing for your credit is to pay your bills on time. Failure to pay your bills on time can have a negative effect on your credit score, especially if these become delinquent.
If you want to take charge of your credit score right away, you need to ensure you pay all of your bills on time. Whenever possible, set up automatic payments so all of your bills get paid on time.
Make sure you budget accordingly so you always have money to pay your bills on time.
2. Get a Secured Credit Card
If you don’t have any credit at the moment, it’s not a bad thing. In fact, you have a clean slate and the opportunity to be smart about your credit.
Unfortunately, this also means some lenders might be hesitant to give you a line of credit. Lenders don’t know how well a person with no credit will make payments.
In order to prove your worthiness to lenders, you should obtain a secured credit card. With a secure credit card, you’re required to put down a deposit, which will be your credit limit amount. For example, if your deposit is $250, that’s how much you will have available to spend.
There are more credit cards you can get if you want to build your credit. Click here to see more options.
3. Keep Your Balances Low
You must have heard how it’s so important to pay your credit card bills in full each month. However, it might not be possible to do so if you made a large purchase.
While it’s not the worst thing in the world to have a credit card balance, you need to make sure you keep your credit utilization below 30 percent.
When you’re smart about your credit utilization, you let lenders know you’re smart when it comes to managing your debt. If you let your balances get too high, it can damage your credit score, but you could end up paying hundreds more in interest.
4. Get Credit for All Your Payments
You pay many things each month aside from your lines of credit, so why not get credit for all of these things?
We’re talking about your rent and utilities. While not every service provider reports your on-time payments to creditors, some do. You have nothing to lose if you ask these companies if they report your payments to credit companies.
How to Build Your Credit: The Bottom Line
Start applying these four simple tips to build your credit and watch the numbers go up. Don’t forget to keep your balances low, get a secured credit card, make your payments on time, and get the credit you deserve.
If you enjoyed these tips and want to learn more, check out this article on money-saving tips for moving into your first home.