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How to Build Credit Scores – Simple Tips For Building Your Good Credit History

by gbaf mag
Editorial & Advertiser disclosure

The good news is that how to build credit is not difficult. There are just a few major steps to follow, and there are also a number of excellent programs designed to help people obtain credit quickly and easily. The bad news is that many people simply do not know how to build credit effectively, or they do not take the actions necessary to accomplish the desired result. So, let’s take a closer look at some of these top tips, strategies and tactics to help you increase your overall credit rating and improve your credit standing.

First, the most important first step on the road to learning how to build credit is to review your existing credit report. In particular, you should take a very careful look at your three major credit bureaus: TransUnion, Equifax and Experian. Review each of these credit reports carefully, identifying and noting any errors in information that may have affected your ability to obtain credit in the past. You can dispute inaccurate information directly with each of the three credit agencies, although it is highly recommended that you dispute the more erroneous information first, since this will initially eliminate the possibility of additional errors.

The next action to take when learning how to build credit is to begin establishing new accounts. Many people mistakenly believe that opening a new account requires getting a credit check, but this is actually not the case. In fact, many lenders will perform a no-credit check after receiving your application, as long as you have not filed for bankruptcy within the past seven years. If you were to apply for a secured loan, however, a credit check will definitely be required, as will documentation of employment. So, in reality, opening a new account does not require you to get a credit check.

The next action to take is to avoid making impulse purchases. The majority of credit cards offer special offers for those who are building their credit report, and these offers can include introductory rates to several different credit cards. While it is certainly important to choose a card that has the lowest interest rate possible, you also want to avoid transferring balances from high interest credit cards onto introductory rates low interest cards. It is very easy to make a mistake and transfer balances without realizing it. However, by learning how to avoid making these types of mistakes when building credit you will find that it is much easier to obtain and keep the most number of credit cards at all times.

If you find yourself carrying a large balance on one or more credit cards, it is important to learn how to build credit responsibly by paying off any high balances as quickly as possible. When paying down a large debt, it is important to avoid applying for new lines of credit. Credit card companies are becoming increasingly stingy as a result of the high default rates on many new credit cards, and if you are not careful you can quickly find yourself unable to make even the minimum payments required for some cards.

Always review your credit reports in detail and check for errors. Many people make the grave mistake of believing that the information reported on their credit reports is accurate and up to date. In reality, this is rarely the case as unscrupulous lenders frequently remove negative items from credit reports to improve their overall scores. In order to ensure that your report and payment history accurately reflect your financial health you must be proactive in requesting your monthly credit reports and addressing issues with inaccuracies in the information reflected therein.

In addition to reviewing your own credit reports, you should also look at your child’s credit reports and consider what might be going wrong. Many young adults begin to establish good credit histories early in life, but bad credit histories can rear their heads years later, particularly if they have amassed a number of credit accounts that are still being used. If you find that there are numerous accounts that have been charged to your name with insufficient funds to make payments, it is imperative that you get these accounts closed as soon as possible. While it may be tempting to keep open these accounts, it is ultimately in your best interest to close them as soon as possible as this will demonstrate your willingness to be responsible in regard to finances.

Another way of how to build credit scores is to maintain a low balance on revolving credit accounts. Having a large balance on high interest rate credit cards like credit cards with annual fees or charges like payday loans or store cards can have a negative impact on your credit scores. Even a small balance on such accounts can add up to a lot if left unpaid, so it is wise to try to pay off these accounts as soon as you possibly can. You should also try and avoid using credit cards to purchase unnecessary items that you do not need in order to save money. A good rule of thumb is to only buy things that you absolutely need and will actually use.


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