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How to Have Good Credit
How to have good credit to have a better future. Unless you are wealthy, if you plan on buying a car or purchasing a home, you will need good credit to get loans to pay for them.
This topic is an important part of any adult's financial backing. While not everyone agrees that using it is a great option for spending, there are proven benefits shown from using it. In some cases, buying on credit is a necessity.
Credit doesn't always carry along with it a positive connotation. That is because some people forget their responsibilities and make mistakes when it comes to spending money or paying their bills on time. Using a credit card and taking out credit doesn't have to be a harrowing experience. With proper education and preparation, you could be on your way to using credit properly and reaping some benefits from the process.
Having good credit essentially goes hand in hand with a certain number that defines your entire credit history. That number comes in the form of your credit score. With the average American possessing a score of 720, the population is split in half when it comes to having good or bad credit
With a bit of hard work and a few tricks and tips, you could be working toward building up your credit to make major life decisions that would require a loan.
Note: For questions about how this would relate to your case, please ask your accountant for specific advice.
Build Your Credit
They say Rome wasn't built in a day, well the same is true here. Improving your credit score is a process that takes time and commitment to responsibility. With a bit of research and diligence, you can take these tips to improve your score potentially.
- Pay Your Bills
If you are self-sufficient and financially independent, you are bound to have bills of all sorts. Utility bills, cable bills, social obligations, everything is due at a certain time. The companies to which you owe money are expecting the full amount on the agreed-upon date.
Every month or quarter, when your bills come in the mail or online, pay them in full and on time. By doing what you are supposed to do, you are building up your credit, and your score could begin to rise. Because all of your personal information is attached to those bills, you will begin to demonstrate your responsibility to loan companies.
If you have trouble remembering to pay bills on time, then set reminders on your phone or write a note to yourself that says the amount due and date by which they must receive it. Many companies offer online bill-paying services in which you can set up automatic payments. Be sure that there is enough money in your account to pay for a bill when they debit your account for automatic payment.
- Maintain Employment
If you have consistent employment with a regular salary, you should be able to afford your bills as well as other things. Credit card companies can be selective when they accept applicants for certain cards. Most of their reason for being so picky has to do with your yearly income level. If the company doesn't feel that you make a sufficient amount of money for you to use their card and have it benefit them, then they may decline you.
Keeping a job will demonstrate that you have a consistent income, and you can borrow money from a financial institution then pay it back.
- Apply For Cards
One of the only ways that you can even put yourself on the credit "map" is if you use some form of credit regularly. You can get two or three credit cards by applying for a new one once every six months, and by only keeping a small number of them in total. If you begin to borrow for your everyday purchases and show that you can handle maintaining several at a time, your credit score may improve.
Make sure that as you are using these cards, you are paying off the entire balance in full every month, and when you pay them every month, it is on time. Those are two of the worst mistakes that consumers make when it comes to using charge cards. These mistakes can destroy a credit score and make you subject to higher interest rates and fees.
- Maintain Checking and Savings Accounts
In addition to using charge cards, you should open and maintain a checking and savings account to demonstrate your financial worthiness as well as responsibility. However, make sure that you aren't opening many accounts at once; this could look like manipulation. Have a few solid accounts and keep money in all of them.
Discovering how to have good credit can be your key to making significant lifestyle changes in your future. Whether you want to buy a house, car, or make an investment at some point in your life, you will most likely need to borrow the money for it. Having good credit enables you to do all these things, and with the tips and tricks provided here, you may see improvement in your score.