Habits That Help You Build Credit

We all know how crucial it is to build credit, or at least now you know. If you want to save on your mortgage or car loan, you will need to build credit. However, this is not a walk in the park; it takes discipline, self-control, and determination.

If you are new to credit cards, you might ask your credit issuer exactly how building credit works. There is readily available information online that you could take advantage of. However, more or less, you can build credit by showing financial responsibility. 

Interested in learning more about what you can do to build good credit? Without wasting much of your time, here are habits that, if mastered, will help you build your credit.

build credit

Get Your Finances In Order

When it comes to building your credit, the first thing to do is get your finances in order. Find out how much you are spending and on what, determine your budget, and document everything. Always try and stick to your budget, by all means.

Pay Your Debts

When calculating your credit score, one of the things they consider is how much debt you have compared to the total available balances. You might think of lowering it to maybe 30%; however, most advisors advise to keep it as low as 10% or less, if you want to boost your score. On the other hand, don’t lower it all the way to 0%, this is because you will not have any payment history established.

Always Pay Your Credit On Time

If you have debt, always make sure you pay on time or before the due date. After making the payment, always be sure to log in to your account or call your card issuer to confirm that your payment has been received and processed. One single late payment can hurt your credit score.

If you want to have a perfect FICO score, make sure you never make late payments at whatever cost. If you think you might forget, set reminders – better yet, set up automatic payments from your bank to your credit account.

You might also have to consider paying on your report date. Keep in mind that every creditor has a report date, and this is what they use when they send information to credit bureaus. Always read the fine print to be sure that you are complying with all the requirements and never miss any payment out of ignorance.

Freeze Your Credit Cards

If you feel you have way too many credit cards that you rarely use, consider freezing some of them. However, freezing accounts has its pros and cons; first, check with your credit issuer to see what you are getting yourself into. Also, keep in mind that keeping your account open with a $0 balance is better than closing it altogether.

Always Check Your Credit Score

As a rule of thumb, always check your credit score. By doing so, you will be keeping tabs with the trends and what exactly affects your score. Compare how you performed last month against this month, so you can see how you are doing through time. If there are any errors, be sure to contact your credit issuer. Then, follow up and confirm that the mistake has been rectified.

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Bottom Line

Building credit is a process, and it will not happen overnight. These habits have to be exercised, every day, every month to effectively build credit. Furthermore, always read the fine print to ensure you never miss any important information that might affect your credit score. Also, if there is anything you don’t understand, ask for clarification from your card or loan issuer. Use these tips and start to build credit today!