How to Build Credit

How to Build Credit

One of the lifelong questions since credit scores were introduced in the 90s was how a consumer builds their credit and achieve a good credit score. This is especially important for life’s bigger purchases such as buying a car or home. This article will detail how to build and improve your credit when you are ready for these purchases.

You first need to start your credit by opening a credit card. If you cannot at the beginning, then try to obtain a secured card or be added as an authorized user on a card. Once you have established several months with these two strategies you should generate a credit score whereby you can apply and obtain a credit card in your name.

Other alternative for establishing credit is applying with a card with a co-signer as well. There is a lesser know path of obtaining a secured credit card whereby you deposit money against the card and utilize it for small purchases. Basically, the creditor has the money to apply in case you don’t make the payments.

Once you have established your own credit it is paramount you make your payments on time and try not to exceed a balance of 30% of the credit limit month to month. Try not to exceed 2 – 3 cards being active at any time and avoid department store or similar cards as they carry much higher interest rates.

It is always recommended that you check your credit every 3 – 6 months to monitor where your score is and to check for any errors or discrepancies.

Maintain healthy credit is a very important part of everyone’s lives and should be taken seriously.