How To Build My Credit Score

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How To Build My Credit Score

• The most important part of starting off your
  financial life on the right foot is to build your
  credit score so that you can get approved for
  loans, credit cards, or other types of financing
  in the future when you need them.

Here are some tips on how to build your credit
score in three easy steps.
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1) Open A Card

• The simplest and most direct way to build your
  credit score is by applying for a new credit
  card. Even if you dont get approved for
  onewhich happens much more often than you might
  thinkyoull still get your credit score dinged.
  That ding may not seem like much, but it will
  start to make a difference over time small dings
  now add up over months and years, eventually
  resulting in higher credit scores.
• Even better, paying off that new card each month
  and paying bills on time will move you toward
  high-scoring territory fastand show future
  lenders that youre someone who can be trusted
  with more high-limit accounts in future.

2) Pay Off Your Balance
On one end of spectrum is paying your balance in
full each month. You dont need a large credit
limit, as long as you can afford it.
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3) Pay On Time Every Month

• Paying off your balance will help build your
  credit scorebut it will also mean that youre
  never carrying a balance and paying interest on
  that money. That approach might be easier said
  than done, though, especially if you tend to
  overspend or find yourself scrambling at the end
  of each month just to pay off bills and fees.
  Making sure you have an emergency fund set aside
  so that you always have some cash available for
  unplanned expenses could make it easier for you
  to keep up with payments on time each month.
• If carrying a balance isnt realistic for you,
  look into other options for building your credit
  scorefor example, getting a secured card or
  taking out a personal loan from a bank might give
  you access to extra funds without risking too
  much debt. Either way, what matters most when
  trying to build (or rebuild) your credit history
  is showing lenders that you know how to use
  credit responsibly.

Missing payments can have disastrous consequences
for your credit score, even if youre not late
with rent or a car payment.
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4) Don't Close Cards

• If you arent able to pay your bill on time
  because of an unforeseen circumstance, call your
  lender before its too late. Delinquent accounts
  often dont count against you immediatelyit
  could take as many as three months for negative
  information to show up on your reportso its
  better to clear things up right away. If that
  doesnt work, submit a dispute and ask that they
  remove any erroneous information related to late
  payments on account of extenuating circumstances
  (the Fair Credit Reporting Act allows financial
  companies to exclude those types of events).

Its tempting to think that closing credit cards
will help you improve your credit score, but in
reality it can have a damaging effect. According
to Experian, one of three major U.S. credit
bureaus, accounts that are inactivei.e., with no
balance and not being usedare reported as
positive information on your report if they are
less than two years old after two years of
dormancy, however, they will be reported as
closed accounts with zero balances.
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• Keeping your older accounts open could result in
  better scores down the road. If you absolutely
  must close an account or card, try transferring
  your balance to another account before doing so.
• Having a low-interest loan through a bank rather
  than through a store or company may also help
  boost your ratingcredit score models are likely
  to view installment loans more favorably than
  revolving debts such as charge cards because
  installment payments tend to be made on time.
  Finally, make sure all of your other reporting
  agencies (not just Equifax) show accurate reports
  about how well you pay back debt. Your payment
  history comprises 35 percent of your total FICO
  score calculation, so dont ignore other scoring
  agencies and wait until theres something
  important at stake before checking up on them!
  The website Annual Credit Report offers free
  access to each bureaus free report once per year.

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