5 Ways to Build a Great Credit Score
Building a good credit score takes discipline, time, and money (of course). You don’t need to be the richest person in the world to build a great credit score. Good financial habits, like paying bills on time and staying within your budget, can help you with this. You can also save up for purchases and pay off credit card loans on time to establish a great credit history.
However, if you want to know how to build your credit score fast, you will find the following five tips extremely valuable. These not only help you build a credit score exponentially fast, but they also help you identify certain ‘score boosters.’ These are ways that will ultimately help you getter better financial deals in the future.
1. Automatic Payments
This is the best way to build a good credit score. If you pay your bills on time, you will be seen as responsible and financially stable. Setting up automatic payments will get rid of that hassle for you. Just calculate your monthly bills beforehand and set aside an amount to pay off the credit card bill. If something doesn’t make sense or is a luxury that you can’t afford, simply get rid of it.
Setting up an automatic payment schedule will prevent you from wasting time on something that can be easily taken care of. Moreover, they’ll help you build a great credit score.
2. Begin with Low Limit Credit Cards
Low-limit credit cards should be mandatory for everyone getting started. Everyone thinks that they will be responsible with credit cards. However, beware of the afternoon shopping sprees. They can come out of nowhere to surprise you. It’s not that you shouldn’t treat yourself every once in a while, it’s just that you shouldn’t lose control. A low-limit credit card will prevent you from going overboard before it’s too late.
When you’re new to credit cards, you should go for a card that offers $300 limits or so. These will work if you have a summer job or just want to save money from your first proper employment. Just test yourself with a pre-defined limit ($50-%100) per month. If you can handle that for about six months to a year, perhaps you can bump that limit up.
With this method, you can slowly increase your credit card limit and establish a great credit history and score.
3. Piggyback Off Others’ Credit
Here’s a great way to build credit scores fast. Use someone else’s credit card to make purchases- someone who you trust and has a good credit score. This should be someone who pays on time and uses an issuer that reports everything to the three credit bureaus.
You will ultimately benefit from their great habits and strong credit history. Eventually, when you buy your credit card, you can benefit from the history already created.
4. Use a Credit Card Instead of a Debit Card
If you get a credit card for your daily purchases, it will help you build a better credit history. Understand that this doesn’t mean spending money that you don’t have. On the contrary, it means showing that you can spend effectively and not overspend even though you have higher limits.
Also, credit cards have much better discounts, deals, and packages than debit cards.
Pay on time, don’t go over the 30% limit on your cumulative credit, and your credit score will get better and better.
5. Reduce Unsecured Debt
While all types of debt are inconvenient to have, some debts are much more cumbersome and dangerous than others. Similarly, while all types of debt can affect your credit score, unsecured debt is extremely harmful to your long term credit history.
The best ways to build your credit score include keeping a single credit card and making timely payments. If you couple that with a secured loan like a car payment, your credit history will be all the better. If you buy a car at a young age and keep paying off the installments or insurance premiums regularly, you will build a strong credit score.
Using these 5 ways you can build one of the best credit scores around. These methods will reduce your financial woes and help you build a strong credit history. That will ultimately help you get better deals and negotiate better packages for yourself.