Building Credit

Lenders typically only feel comfortable enough to give to those that they are confident will pay them back sooner rather than later. For this reason, we have something known as a credit score. It’s important that over time you build up that trust, primarily based on your personal credit score, which is just an aggregate of all of your credit history that helps gauge how trustworthy you are.

Credit Reports

Have you checked your own credit score? Your credit score is summarized into something known as a credit report, these are put together and maintained by three independent credit bureaus, these being Experian, TransUnion, and Equifax. All creditors should be voluntarily reporting your borrowing and repayment actions to the credit bureaus, whether they be credit unions, banks credit card issuers, or any other creditors nobody is exempt or going to purposefully not report your activities. Your credit score isn’t the be all end all when it comes to getting a loan, but it is a huge factor and you need to keep a close eye on it.

Maintaining Your Credit Score

Let’s focus on all the reasons you really need to be working your hardest to build and maintain good credit. Truly the number of reasons you want good credit are limitless, but we’ll focus on only the most critical. It’s important to have credit available to help you out with big purchases like a car or a home, most people don’t have the money on hand to directly finance these things themselves. On top of that, a credit card offers you a lot of convenience and a lot more protection over something like a debit card, and you’re not going to be able to get one without some kind of credit score to your name. A higher score also comes with perks like being able to get the lowest available interest rates on credit cards, plus other rewards. Utilities companies, landlords, and even potential employers may look at your credit score before making any decisions, so it is important that you keep it in close consideration.

Keeping a Good Credit Score

Once you know your credit score, you can always keep improving it. The best thing you can do for yourself, even if you don’t have credit, it just go get a credit card and make some small purchases on it each month – enough that you know you can pay it off in full every month. Then either after every purchase or on a set day every month you need to pay your card off. This will start building up your score and paying those bills off in full every month is going to look great to any other potential lenders. Credit is a lot more complex than just incurring expenses, paying with a card, then paying it back, but that’s what you really need to know to get started and get that credit score climbing. You need to begin learning how to build credit at 18 instead of waiting until you’re older and need access to loans and credit cards.