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5 Tips for Establishing Good Credit

5 Tips for Establishing Good Credit

smart phone checking credit score

Building credit can be tricky. If you don’t have a credit history or good credit, it may be difficult to get a loan, a credit card, or even an apartment. The following tips can help you build good credit. 

1. Spend money wisely.

How you spend or overspend can impact your credit. To have good credit, you must prove you are capable of using credit responsibly. If you have a credit card, try not to charge up to your maximum credit card limit. This could have a negative impact on your credit score. The best strategy is to spend less than half of your credit card limit.

2. Avoid having too many credit cards. 

Having a lot of credit cards could seem pretty great at first. However, if you end up using all or most of your credit it can lead you into a significant amount of credit card debt. A simple strategy when you are trying to establish credit is to limit the number of credit cards, possibly to only one. One card is easier to manage and can help avoid overspending.

3. Make payments on time. 

Make 100% of your payments on time, not only with your credit accounts but also with your other accounts, such as utility bills. Bills that go unpaid could go to a collection agency, which will seriously hurt your credit. 

4. Pay your balances. 

Another way to establish good credit is to pay your balances in full each month. This will prevent interest charges and help you manage your spending. Plus, this will help keep your credit utilization low. But if you do carry a balance don’t let it be more than 30% of your credit limit.

5. Maintain your accounts. 

Keep accounts open for as long as possible. Unless one of your unused cards has an annual fee, you should maintain your accounts, keeping them open and active. This will help with your length of payment history and credit utilization.  

To keep up with your current credit score, visit www.annualcreditreport.com for more information.