It can be hard to build your credit, especially if you are starting from scratch. For most of life’s milestones, such as buying a car or a house, you will need a credit history to make the purchase. Unfortunately, if your credit score is low, you likely won’t get approved.
Here are five tips to keep in mind if you want to start building or improving your credit.
Check your credit report
The best plan begins with knowing what is in your credit file. Request a free credit report by visiting annualcreditreport.com and reviewing resources to learn how to read your report.
Lower credit utilization can help you
When building credit, try to use only a small portion of your credit limit. Higher utilization can mean lower scores. And if possible, pay your revolving accounts off in full each month.
Set up automatic payment reminders
On-time credit card and bill payments are generally one of the largest factors impacting your credit score. With online banking resources, you can set up automatic payment reminders and improve your credit score.
Open the right credit card for you
When researching the right credit card for you, look at any annual or reoccurring fees associated with the card, the reward benefits and the annual percentage rate (APR.)
Building your credit history takes time
Opening too many accounts at once can have a negative effect on your credit score. Take it slow, particularly if you have limited historic credit to begin with.
Remember, there is no quick fix to improve your credit and building a good credit score. Understanding how much you can afford and setting a realistic budget for yourself can help you make better financial decisions about how to manage your debt and in turn, improve your overall credit profile.
Infographic: Tips for improving your credit score
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This content is informational only and does not constitute financial, legal or tax advice. It is best to consult your own advisor who knows your specific situation and can advise you accordingly.