Build Your Credit Score

raise credit score

Building your credit score can help save money on loans, lower deposits, and help you get a job or a place to live. However, you need to build your credit in a certain way without taking too many credit cards or loans. So how can you build a better credit score?

Put Accounts in Your Name

You want to put accounts in your name. These accounts include phone, electric, gas, water, garbage, internet, and other utilities. Having your name on loans helps too, such as school, car, and house loans. Also put your name on one or two credit cards and rental contracts. Or you can also be an authorized user on credit cards. If you want to help your teenager build credit, you can put them as an authorized user on your credit card, but be wary about doing this. If you are married and your spouse is financially responsible, put both names on accounts and loans.

Pay Bills on Time

Paying your bills on time is the most important way to build your credit. If you don’t pay bills on time, your credit score will take a huge hit. Sometimes, you can ask a company to remove the late payment from your credit score. Also pay balances on credit cards in full. This way you avoid any interest charges.

Check Your Credit Score

You want to check your credit score regularly. This way you can see if someone steals your identity and if you have a false item on your report. Report any problems immediately to the three credit bureaus Experian, TransUnion, and Equifax. This way they can remove any false items.

You can request your credit score three times a year for free from the major credit bureaus. You can go to http://www.creditkarma.com for a free score to view anytime. Often your credit card issuer and bank will provide your credit score for free. Do not fall into the trap of paying to see your credit score!

When companies do a hard enquiry on your credit, it will drop your score a little bit. Companies do hard enquiries when you apply for credit cards and loans. So try not to apply for too many loans and credit cards within a short period of time. This also indicates that you are desperate for cash.

Few Loans and Credit Cards

Only take out so many loans and credit cards that you can reasonably pay back. Too many credit cards hurts your score. You need to have a good debt-to-income ratio. That means that you earn more than you owe each month.

Do not take out title and payday advance loans. These have insanely high interest rates and hurt your credit. These people will hound you forever!

If you have medical bills, go through the medical provider for a payment plan. They offer lower interest rates than credit cards, including Care Credit. Care Credit still charges the same amount or more interest as regular credit cards. They only provide a small grace period of zero interest.

Avoid High Credit Card Balances

High balances will hurt your score and you pay more interest. In fact, you can avoid interest charges completely if you pay each statement balance in full.

Do Not Co-sign

You may want to help someone else out by co-signing on a loan or putting someone on as an authorized user on a credit card, but be wise about it. You are responsible to pay back whatever debt they incur on that loan or credit card. Only co-sign with people who are financially responsible, including family. Or only do it if you can afford to do it. Their actions will affect your credit score.
Now that you have some basic steps to build your credit, enjoy having a higher credit score and try to keep it that way.

More Info

http://www.myfico.com/crediteducation/improveyourscore.aspx

Credit Bureaus

http://www.experian.com
http://www.transunion.com
http://www.equifax.com

Eileen Davis (Guest Blogger)

Eileen Davis (Guest Blogger)

I'm a crazy redhead. I have three hyperactive boys and a wonderful husband. I earned my BA in English Language from BYU. I grew up in Southeastern Utah in the middle of nowhere. I now reside by a big lake in Utah.
Eileen Davis (Guest Blogger)

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One Response to Build Your Credit Score

  1. Justin says:

    A good credit score is like, crazy important later in life. Speaking from experience, it’s really, really helpful when you do some of the things for your teenagers mentioned in the post, believe me, they’ll thank you for it!

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