For anyone seeking to have a financially stable lifestyle, building good credit is something you’ll need to do. However, starting on your way to build good credit can be daunting. From knowing what type of loans or cards to open to understanding what can work against you, there’s a lot that you may not know about building good credit. Here are a few tips to help you out:
Get professional help
When it comes to building credit, it’s certainly not a piece of cake. If you’re trying to put your best foot forward and make sure you get the kind of results you would want from your credit score, professional credit monitoring and support can help you make the best decisions. Professionals know what to watch for, how to get the most out of your efforts, and they can certainly help you avoid any pitfalls along the way.
Be careful about how much you use
One common mistake that many people make when getting started building credit is that they open too many cards. They take out more loans than they can handle and before they know it, they’re in deep water with debt they can’t get on top of. If you’re looking to get an excellent credit score, your credit utilization should be below 50%.
In fact, it’s even better if you can keep it at 35%. When in doubt about whether you should open a new card, take a look at what you already have to pay off—if it’s already quite high, then consider waiting on new purchases until later on.
Pay on time
If you want to be confident that you’ll have the kind of credit score that opens doors, then be wise about your payment schedule. Late payments can be a big mark against you. So instead of letting them stack up, finding yourself late, and starting to nosedive with your credit score, consider using an app that quickly reminds you when it’s time to make a payment. Try to schedule payments, whenever possible, to fall on days when you know you’ll already have received your paycheck, so that it becomes easier to pay your credit cards, etc.
Consider a big purchase
If you want to build good credit, a large purchase may be necessary. It can prove your ability to pay off loans and whatnot while also allowing you to get used to frequent, timely payments. This may look like buying large gear for your favorite sport or like buying a car.
While you want to be careful with large purchases and be sure that you can afford them, if your income allows for timely payments, then a big purchase that is paid off over time and on time may be the perfect way for you to build the kind of credit that you have in mind.
Don’t bite off more than you can chew
A big mistake that people make when striving to build credit is that they open too many accounts or take on high payments that they simply can’t keep up with. If you want to build solid credit, an important thing to do is to make a budget that showcases exactly what kind of money you actually have available. The last thing you need to do is get into serious debt.
Additionally, as mentioned previously, a high credit usage doesn’t do much good for your credit score, so keep this in mind when trying to decide if you should open another account or not.
In Conclusion
As you seek to build a solid credit score, keep these tips in mind so that you can avoid the pitfalls associated with poor credit habits. Stay on top of payments and plan ahead with your favorite budgeting tool so that you always do right by your credit score.