Ways of Establishing Good Credit
Establishing good credit is one of the most important factors for all American consumers. Having good credit mean that it will save you money on auto loans, mortgage loans, student loans, installment loans, and credit card interest rates. Good credit also means that you will pay less on your insurance premiums. Many companies also check your credit scores as part of their job application process. A low credit score or a lot of negative items on your credit report can literally cost you a job. Having no credit is like having bad credit. If you have no credit, you need to start thinking about establishing good credit and the sooner that task is done, the better it will be because credit reporting company rate on credit longevity as part of deriving to your credit scores.
Build Credit With Outside Help: Joint Credit
For those who have no credit, a good way of establishing good credit is by piggy backing on somebody’s good credit like your brother, sister, or parent. This can be done rather quickly by adding you as an authorized user on someone else’s credit or as a joint user.
Being added as an authorized user does create some risks. If your parent has excellent credit and you are added to your parent’s credit card as an authorized user, you will benefit from getting instant excellent credit and the history of the good credit. The risk associated with this method of establishing good credit is that in the event your parent is late on his monthly credit payment, it will reflect it on your credit report, thus damaging your credit.
If you decide to be an authorized user on some elses credit, make sure the creditor reports authorized users. There are creditors that do not report authorized users to credit reporting agencies.
Build Credit With Cards
Another method of establishing good credit to get a few secured credit cards. Secured credit cards is the most powerful tool there is in establishing good credit or reestablishing credit after a bankruptcy, foreclosure, collections, judgement, tax liens, or late payments. The key number of secured credit cards to get is 3. Each secured credit card should boost a consumer’s credit score by at least 30 points or more. Make sure the secured credit card company reports your credit activities to all three credit reporting agencies.
Build Credit With Loans
Get an auto loan or installment loan. For example, if you need to purchase a car and have the money to pay the car in full, just give them 50% down and try to finance the other half. This is another powerful tool in establishing good credit.
Establishing Good Credit: Always Remember These Tips
Another major factor in establishing good credit is to use revolving accounts regularly but never max it out. Always leave a small balance on the credit account like $10 dollars and make sure the majority of the credit limit is wide open. A good credit score is derived by having a large available credit limit. For example, if you have a $500 secured credit card and have a credit balance of $475, this will hurt your credit scores. If you only have a balance of $10 dollars, you have an available credit limit of $490. This will maximize your credit scores.
Never close out a credit account. Many consumers cut up their credit cards and close it out. Leave it open because having a credit history is part of your credit score. The more open credit account credit history you have, the better,