You’ve probably heard how important it is to have good credit when you buy a house or a car. Maybe it seems like a far off goal, so it’s fallen to the back burner. However, it’s an important concern that you should make a priority. Building and maintaining good credit is a vital step towards creating a solid financial foundation. Here are a few simple steps that may help build credit:
1. Apply for a credit card—not 10 credit cards. Make some purchases each month, but avoid reaching your credit limit. Lenders generally do not want to see that you have maxed out your limit every month. Pay your credit card on time. Also, it can be wise to keep your first credit card. The longer you have a given credit card, the more credit builds on it. If you cancel it, you’ll lose the history and credibility that you’ve built with that creditor or lender.
2. It can be okay to have some debt. Good debt can include things that increase your overall wealth, but that you cannot afford to pay off immediately, such as student or car loans. Don’t forget that you have to make each payment on time. Making timely payments can show a lender that you are creditworthy.
3. Check your credit report at least once a year to make sure that the information is correct. Identity theft is very prevalent these days! Verify that the credit cards and loans on the report belong to you and that the information about your balances and payment history is accurate. It’s also a good idea to confirm that all of your creditors are reporting on each of your accounts. One free credit report can be obtained each year per individual from each of the national credit-reporting bureaus. Make it a habit to review your credit history every three months with a report from a different agency. Check their links to obtain a report or request it from the following site approved by all three bureaus: www.AnnualCreditReport.com.
