Using credit responsibly is a must if you want to build and maintain a good credit history. Having good credit may not seem like a big deal now, but poor credit can keep you from purchasing a home, funding your education, and even prevent you from getting a job. Here are seven tips to help you build a good credit score.
Borrow What You Can Afford. Credit cards are not an open invitation to buy things you can’t afford. Purchasing things outside of your budget is the fastest way to get into debt and face credit issues. Having smart charging habits lets lenders and future creditors know you’re a responsible borrower.
Avoid Maxing Out Your Credit Cards. Try to avoid reaching the limit or coming close to the limit on your credit card. It is irresponsible, specifically if you don’t plan on paying the full balance in a month time. According to Vantagescore.com, the ideal utilization rate should be no more than 30 percent of the cards limit.
Limit the Number of Credit Cards You Open. Don’t make the mistake of opening too many credit cards too soon. Each time a creditor runs your credit report it negatively impacts your credit score. Also, the more credit cards you have the more you will use them.
Pay the Balance in Full. Only charging what you can afford makes it easier to pay off your balance in full each month. Paying off your balance each month shows creditors and lenders you are capable of paying bills, which they want to see.
Make Payments by the Due Date. Try to avoid making late credit card payments. Not only can it negatively impact your credit report, but after 60 days past due your interest rate could increase.
Carry Your Balance the Right Way. It’s not the end of the world if you carry a credit card balance over each month. Try to pay more than the minimum due, it will allow you to pay off the balance faster. If you stick to less than 30 percent of your credit limit it won’t hurt your credit.
Allow Your Credit to Age. The older your credit history is, the better your credit score will be. Even if you don’t utilize the card regularly leave the account open to help increase your credit age. Closing an account doesn’t immediately appear on your credit report.
Hopefully you found these tips and ideas helpful when it comes to establishing a good credit score. Have any other tips for others, share them here.
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