How To Build Your Credit

There are multiple answers to the question of “how to build your credit?”. And the answers all really depend on where you are at currently with your credit. Do you have no credit? Do you have bad credit? Do you have good credit but want it better? We’ll cover these three scenarios below.

Building Your Credit With No Credit History

Building credit with no credit is fairly simple. But it takes time and it may be a little frustrating.

By far the easiest ways of how to build your credit is with a secured credit card. With a secured credit card you are basically giving the credit card company a lump sum of cash and they in return let you borrow it back. This is not a debit card. They keep you money until you cancel the account. You are basically paying to borrow your own money.

If a secured credit card is not to your liking there is a way to make getting a regular credit card much easier. If you have utilities in your name and you have a good pay history I would recommend sending in your pay history along with your credit card application.

This makes the decision process much easier for the credit card underwriter. Since you have no credit history it makes their job difficult in deciding whether or not they should grant you credit. By providing your pay history from other sources that are not included on your credit report you are giving them some great information to base their decision on.

Building Your Credit With Bad Credit History

Building your credit with a bad credit history will take some work. The first thing I would recommend is getting a copy of your credit report so you know what is on there. From there I would start disputing anything on your report that contains errors.

While you are going through that process it is crucial that you make all of your payment s on time. If you continuously make late payments you will never build up your credit history.

Next you can look at getting new credit accounts. These new accounts will not help immediately but they will start helping within about 6 months.

Finally you can look at reducing your over all credit owed. Try and keep your credit card balances at 50% of the amount you can borrow or less. If you have collections or judgments you can look at settling those so that they will show zero balance. This has a short term negative effect on your credit but will quickly help you increase your scores after this lull.

Building Better Credit

If you already have good credit but want to know how to build your credit even better here are a few things to consider.

First look at your credit card balances. If you have balances that are more than 50% of the charge amount allowed on the card pay them down.

Second get a copy of your credit report to make sure that everything is correct and that there are no errors. If there are errors start fixing them.

If all your credit is in line, you don’t see any errors, your credit card balances are low the only other thing I could suggest is to run your credit through a credit simulator. There are multiple services available on the internet for this. Just keep in mind that it is a simulation. There is no guarantee that if you do what it says that your scores will increase.