5 Tips For Establishing Good Credit

Good credit is essential in order to do things like buy a home, pay for your college, and even get a cell phone contract.  

Unfortunately, a reality of life is that whether you like it or not, credit is an integral part of your finances. Therefore you must have good credit history.

So how do you get started? Here are the first steps to building good credit. 

Get a Card

The very first step is getting your first credit card. Every transaction that you make and every payment that you make becomes a part of your credit history. Your credit history will be a reflection of how responsible you used your credit. 

Getting your first card may be tough without any credit history since banks will check your credit when you submit your application

There are several cards which are ideal for first-time credit card users.  The most promising might be a secured credit card. A secured credit card requires a security deposit before approval. You’re very likely to be approved since the deposit acts as collateral for whatever you charge on your card, posing less of a risk for the bank. 

Pay More Than Minimum Due

One of the biggest factors on your credit report is how reliable you are at paying back what you borrow. Your credit score will be higher if you pay more than the minimum due each month- ideally the balancing full. 

Not only will you have a higher credit score by paying more than the minimum due, but it will also help you from taking on too much debt. 

Check Your Credit Regularly

When trying to build your credit, it’s essential to keep an eye on your credit score. Checking at least once a month will help you stay on top of any red flags or things you need to deal with.

Sometimes there may be errors on your credit score, and it’s up to you to make sure that you spot them as early as possible. 

Never Make Late Payments

In addition to paying more than the minimum due, you should also always pay on time.  Even one late payment can make a significant impact on your credit score, which could last for years on your report. 

The best way to avoid late payments is to sign up for autopay, which makes it easy never to forget when a bill comes. 

Don’t Borrow More Than You Can Afford 

The best way to stay in good standing with the credit bureaus is never to borrow more than you can afford.   Contrary to many people’s belief, a credit card is not free money. You will have to pay back with interest attached.