Building Credit – How to Start Off On the Right Foot
May 21st, 2009, Written By: Kerri Randall
A good credit score is vital for daily life. It can determine what kind of car you drive, if you’re eligible to buy your dream house, and even help you secure a job offer. We all had to start at the bottom, though, with no credit at all. It might seem like you have a long way to go from scratch, but if you establish good habits right away, you can build a good credit history rather quickly. In only 6 months to a year, you could have a pretty high score.
It might seem like common sense, but be sure to pay your bills on time and you’ll be building a positive history. It only takes one slip to place a negative mark on your credit report, and it can take a long time to get it removed. Consider signing up for automatic payments or establish a good way to remind yourself of your payment due date so you won’t miss it.
You might also be excited by your credit limit, thinking of all the things you could buy. Try not to be tempted by the lure of “free money.” You have to pay back what you spend, and if you spend outside your means, you’ll be more likely to start missing payments or only being able to pay the minimum amount due. It’s also not a good idea to keep a high balance. Not only could you run out of room for emergencies, but the next time you need to apply for credit, you could be denied or have to accept a lower limit with higher interest rates. If you’re constantly at the edge of your current credit limit, you appear to be a risky investment for creditors, and they won’t trust you with their money.
One way to help build your credit history is to apply for a loan with a cosigner. With the help of someone else’s good credit, you could secure a loan with good terms that you might not get on your own just yet. Once you’ve been approved and you make your payments on time, you show that you are responsible and deserving of good terms, and this will help raise your credit score.
Stay on the right track from the beginning by spending smart, paying on time, and keeping an eye on your overall finances. You’ll raise your score as quickly as possible and be more likely to keep it high in the future.
Categories: Establish and Rebuild Credit
