Building credit is an important part of living within the United States. Good credit is essential if you are planning to obtain an apartment, car loan, or any sort of general loan. Fortunately if you do not have the best credit there are many ways in which you can improve your credit score. Fortunately, there are many ways in which to establish credit in order to improve a bad credit score or simply just improve your comprehensive credit rating, In the United States, you will encounter three main credit report agencies. These five steps have been crafted in order to provide you with simple steps that will have a dramatic impact on your overall credit score. Credit bureaus provide a valuable tool for you to use to make sure that you have a file that is safe and untouched by anyone that may wish to commit identity theft. Unfortunately maintaining your credit score also means making sure that others do not try to steal your identity as this can negatively affect your overall rating.
1. Create a Bank Account In Your Name
The first step you can take is perhaps the easiest. Opening a bank account, while it does not directly reflect your credit, ultimately will help you establish a sense of trust with your creditor. When it comes time to create a loan, you will need to have an established account at a bank. Allowing the lender to know that you are trustworthy and do not have flags on your bank account is a good first step in guaranteeing your ability to secure credit. Thus while it might not be the most obvious way to improve your credit score, it is an extremely important step through the process.
There are many banks across the United States in which you can open your first account. You should just be made aware that any negative activity that you incur will appear on your credit report and thus negatively affect your score. It is important to make sure that your bank activity is properly managed. Lenders like to know that you have an income in which you are able to handle with expedience and care. Doing so is a first simple step towards establishing a credit relationship.
2. Utilize a Co-signer
When it comes to building credit, you do not need to do it by yourself. When you acquire a co-signer, you are putting more faith in the credit decision between the lender and yourself. Knowing that you have an essential backup plan incase you cannot pay, lenders are more willing to provide you with a loan. This helps to build your credit as long as the co-signer is dependable and can follow through with their support.
Co-signing with someone who has an impeccable credit score is perhaps the best way in which to build a solid line of trust. We suggest choosing someone who is within the family or is a very close friend. Lenders are more willing to trust co-signers that are closer in relation to you. You should be aware. However, that utilizing a co-signer means that their credit score is affected if you have any untimely payments that you fail to make. It is incredibly important to make sure you follow through with all of your payments in a timely fashion.
3. Signup for a Good Credit Card
Signing up for a credit card is one of the easiest ways to secure credit. We highly suggest that you seek out a secured credit card as these will have a bank that stands behind them and makes sure that your credit is protected. When you look for a credit card, it is important to find one with the lowest APR possible while also providing a decent credit line. APR relates towards the amount of interest you have to pay back on when you charge. Paying 20% instead of say 9% is absolutely no fun, so trust us, you are going to want to establish a line of credit with a credit card that provides a low interest rate.
Once you’ve made purchases with your credit card in a timely manner, your credit score will start to rise. It is important to remember, like any other sort of borrowing, if you do not pay off your credit card properly your credit score might become negatively affected. Always stay on top of your credit paying in a timely manner.
4. Hold a Steady Job
This tip might seem obvious but typically people do not think about it in relation to their credit. If you are unable to hold a steady job, it will act as a sign towards your money lenders that you are not stable with your income. It is extremely important to take steps to put yourself in a position in which you are always working and able to pay off your debt. Creditors do not like to see reports in which people frequently are unemployed. This is a straightforward step, but it is nonetheless, important.
5. Take Out Loans
Finally the most important thing you can do, and typically the reason you build credit, is to take out loans. Loans will help you to establish credit as you pay them off through your monthly payment plans. Loans will also allow you to go out and make large purchases or pay for important services. We live in a world where they are a necessity. You should not be afraid to take a loan out for a car if you are able to pay the loan off. Paying the loan off will only lead towards better credit for you.
Go Out and Build Your Score
The provided five steps are just the tip of the iceberg when it comes to building credit, but without a doubt if you adhere to them, you will be able to establish a much better credit score. We always encourage people to take their time, read through everything, and assess their options. Credit is not something you want to dive straight into. Assessing your situation will help you in the overall process to achieve your ultimate goal.