Having good credit is very important. The better your credit is. The less your interest rate will be for loans and credit cards. A few years ago, my credit was horrible. Thankfully, I got my act together, and now it’s in the 700’s. If you are young or if you are just now starting out, you might wonder how to build good credit. It is not difficult. In today’s post, I will be going over five easy ways to build credit.
Open a Bank Account
If you are young or if you are trying to build credit, the first thing that I would do is to open a bank account. I would open a checking account and start off with $100. You should make sure that your account stays in good standing. Also, try not to get any overdrafts. An overdraft happens when money is withdrawn from your account, and the available balance goes below zero. When you’re building credit, overdrafts don’t look good at all. Your bank will also charge you a fee for those as well. Overdraft fees can be anywhere from $15 to $35. It sucks having to pay those fees.
Take Out a Small Loan
Taking out a small loan is another good tip. A good amount to borrow for the loan is $200 or less. You should pay the loan back in full monthly if possible. Repeat that process a few times. The more you do it, the better it looks to a future lender. A good place to apply for the loan is a credit union or a bank that you have a relationship with. They should be able to work with.
Have Good Employment History
Having good employment history is vital. It shows people that you are reliable. Lenders probably will not give you a good interest rate if they see you jumping from job to job or if you have long bouts of unemployment. They are looking for stability. It also shows that you are responsible. If someone is leaving their job every year, the lender may question if you can handle a loan or a credit card.
Get a Credit Card
Getting a credit card is another way to help build credit. Only use this tip if you are mature enough. A lot of people mess their credit up by freely spending money that they really don’t have. My suggestion would be to get a card with a limit of no more than $300. Use it a couple of times for groceries or gas and pay it off in full monthly. You don’t want to get in over your head with credit card debt. I recently paid mine off in March after carrying some for years. I don’t want you to be in a similar situation.
Pay Your Bills on Time
My last tip is that you should pay your bills on time. Whether it’s a phone bill or your light bill, pay them on time. Lenders and creditors check this information. Payment history makes up 35% of your credit score. You don’t want to get behind while you’re trying to build your credit.
In review, the five easy ways to build credit are to open a bank account, take out a small loan, have good employment history, get a credit card, and pay your bills on time. All those actions are very attainable. You just have to make it happen. Once you do, your will start building credit in no time
When did you start building your credit? Did you use any of these easy ways to build credit?
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