Building up your credit score is not difficult, but it does require some discipline — and a few handy tips can’t hurt. If you can stay on top of the monthly payments crucial to building credit, you’ll earn a good score more quickly.
Open a checking account
The first step to building your credit rating is to open up a checking account if you don’t have one already. Opening a checking account is straightforward. Just make sure you have all the necessary documents with you when you visit your local bank.
Pay on time
If your checkbook is kept in good order, making all of your monthly payments on time will help build your credit rating quickly. Keep in mind that most banks will not allow you to write a check if there is no money in the account. So make sure that you have enough money from each paycheck to cover all of your bills for the month.
Staying on top of your monthly payments will help you out in two ways: one, it will keep your credit score high, and two, it will build a solid payment history, which drives 35% of your credit score.
Apply for a credit card
Another way to build up your credit score is to apply for a credit card or two. You do not need any specific cards, but Visa and MasterCard are the most common, offering some advantages. Credit cards can be great tools when used responsibly, but be sure to pay down your balance in full each month to avoid costly interest charges!
The first card you apply for should have a lower limit, allowing you to establish credit more quickly. That way, if you lose track of your budget and overspend your card limit, there won’t be much damage done (so long as you still pay your bill on time). It is always a good idea to shop around for the card that will best suit your needs. Rewards on everyday purchases like groceries and gas can help you focus on covering necessities and be less tempted to overspend.
Once you have a credit card, you should begin charging small items every month and paying them off in full. For example, if you buy a cup of coffee every day, charge it up to your credit card and then pay it back immediately.
Have a steady income
The best way to begin building your credit is by first having a steady stream of income. Once you have a job, keep track of everything you spend on your card. Pay it back before it even begins to accumulate any serious interest. Managing your cash flow is always important, especially when trying to improve your credit score.
Create a household budget
The final thing you will want to do is put yourself on a budget. Once you’ve established how much you need to spend each month on essentials, you should be able to set aside enough money for each pay period to maintain your accounts and still have some fun. If you want help managing your cash flow and making sure all your bills are paid on time, that’s what we’re here for.
Having good credit is like learning a new skill: it takes time and effort, but there’s a lot to be proud of when you get there.