How to establish good credit

How to establish good credit






1- Having invoices in your name will not affect your credit. Often, this is a misconception to have a positive credit. The large utility companies and telephone companies only inform credit agencies when payments are not made.

2 - Always pay your bills on time. Pay all credit card bills in full as soon as you receive them, so you do not show yourself as a "defaulter". It may be necessary to obtain a "secured" credit card if your credit rating is already low or does not exist. Do your homework and research as some secured credit card companies review your credit before giving your approval and may reject you.
Make automatic payments with the bank or the credit card company. Almost all credit cards will allow you to make automatic withdrawals from your checking account each month to pay for your credit card. In this way, you will not risk forgetting the payments or registering as a defaulter, which lowers your credit rating. In general, automatic payments allow you to specify if you want to do the following:
Register to pay the minimum monthly amount. Credit cards will force you to pay a minimum amount each month; otherwise, you run the risk of being penalized.
Register to pay the balance on the credit card. Usually, the balance on the credit card, or the amount you have, will change from one month to the next. Make sure you avoid an overdraft when you do.
Register to pay a fixed amount each month. This fixed amount can be found somewhere between the minimum monthly amount and the balance payments.
Realize the possibility that this method does not work for everyone; If you do not, follow another way to establish a credit.

3 - Get a reference for a credit card. It is also called a secured credit card. This is a program that many large banks will have, in which you pay a deposit on a credit card (usually equal to the limit) in order to get a card, even when you have a lower rating than a perfect credit. By using this startup card, you can establish your credit. [2]

Just make sure they declare the card to the major credit rating companies.

4 - Keep a job Many places that ask about your credit rating will also see other information, such as if you can keep a job. If they see you change jobs every few months, then your credit rating will not really be enough to help you: you'll be very risky. Maintaining a single job for a few years in a row will seem more stable. This will help you with things like getting a mortgage. [3]

If you look reliable, they may be willing to forget a credit rating slightly lower than the ideal one.

5- Stay in one place. Like the previous ones, many places will see your housing history. If you moved many times, you are a risk. However, if you stay in an apartment or house, you will seem much more reliable.

6- Request a credit card. Choose one that offers the lowest interest rate and, if possible, one that offers a reimbursement percentage for the purchases you make. Do not try to have a new credit card until at least you have good credit, since each application counts against your credit rating, as well as being denied.

Apply for a major credit card, such as Visa, American Express, Discover or Mastercard. These will help you to have a score of 700 faster.

If you can not get a major credit card, think about having a "secured" credit card, which works after you deposit money at a issuing bank.

7- Open checking and savings accounts. Lenders consider bank accounts as signs of financial stability and consistent saving behavior. Given this, evidence of continued use of checking and savings accounts increases the chances of a bank offering you a credit card.

However, you should not simply open accounts everywhere, as this will make you look bad instead of good. Just have more than one and make sure there is money in each of these.

Another alternative is to contact your bank or financial institution, open a current account with them and deposit a specific amount of money "in" the account. This is called a previously paid current account.

8- Open checking and savings accounts. Lenders consider bank accounts as signs of financial stability and consistent saving behavior. Given this, evidence of continued use of checking and savings accounts increases the chances of a bank offering you a credit card.

However, you should not simply open accounts everywhere, as this will make you look bad instead of good. Just have more than one and make sure there is money in each of these.

Another alternative is to contact your bank or financial institution, open a current account with them and deposit a specific amount of money "in" the account. This is called a previously paid current account.

9- Ask for help. If you have done a good job to establish a good score and then find that you are a bit behind on a payment, you may eliminate that late payment from your registration if you ask nicely. If you have a good track record with the entity with which you delayed payments, then they may be willing to eliminate it if you ask.

10 - DO NOT DESERVE TO HAVE A GOOD CREDIT DALE TIME

11 - Check your budget Budget the amount of money you enter, the amount of money you want to save and the type of things you must pay monthly.

Having a budget is good even if you are not interested in fixing your credit. A budget will allow you to save money, be prudent about the financial decisions you make, and naturally, fix your credit.

Budget how much you can spend instead of how much you would like to spend. There is a difference. If you set aside $ 200 each month for discretionary purchases, a $ 600 flat-panel TV will have to wait three months before you can buy it. Do not buy it immediately or you'll be indebted for $ 400 for two months.

12- Follow your budget What's the good thing about having a budget if you do not really follow it? If you say you're going to spend $ 120 on groceries each week, do not exceed $ 120. It's easy to say and hard to do. But it is essential for a good credit rating.

13- Use a credit card instead of cash to make a small purchase you can afford. Make sure you do not charge more than you can actually pay at the end of the month. Some illustrative examples are the following:

Use your credit card to pay for gas. If your income is $ 2000 per month and your gas expenses represent $ 140 per month, you can pay $ 140 with your credit card each month.

Do not use your credit card to pay a $ 1500 mattress. If your monthly income is $ 2000, charging your card with a $ 1500 purchase immediately is a terrible idea. You will have to pay for several months and you could be late in a payment.

14 - Pay more than the minimum payment. You have to pay more than the minimum payment of the card and thus work little by little to pay it off completely. If you can not pay more than the minimum payment, then you are not financially responsible and you have assumed excessive debt.

15 - Stay well below your credit limit. Frequently, approaching your credit limit between 70 and 75% or using your cards to the limit will be dangerous and irresponsible for lenders as it often is. [4] Credit cards are a safety net, so leave a little extra space. Just as you would not want a true safety net of the same size as your body, you will not want credit cards without the ability to charge them.

16- Review your annual credit report. If you do not know how your credit looks, it will be difficult to fix it. You can get a free annual credit report through the government-administered AnnualCreditReport.com website. For your credit rating, you will have to pay a nominal fee, as they are not offered for free. When you analyze your report, make sure of the following:

Claim any additional account that is not yours or that you have not opened.

Claim any report of late payments that you actually paid on time.

Claim any insolvency over 10 years that still appears as pending even though you have established bankruptcy.

Claim any negative information older than 7 years.

17- Separate your debt into several different cards if possible. Your FICO credit rating will improve if you avoid a large balance on a single card and if you have several small balances on different cards instead.

This is because the FICO formula looks at the difference between your balances (how much you owe) and your limits (how much you can charge per month). A low ratio in the balance to limit ratio allows a better credit rating than a high index in the balance to limit ratio.

Even if you pay your balance, a high ratio in the balance to limit ratio is not ideal. If you spend $ 4000 with a limit of $ 5000, you get an index of 0.8, which is very high. Try to get an index of 0.1, which means that you spend 10% of your available limit.

18 - Do not stop using your credit cards. Do not let your credit cards stay around without your caring. If you do not use your credit card, your credit rating will be reduced. The credit rating formula prefers to see a card that is used regularly to one that is left unused.

19 - Make sure your credit is subject to the main companies. Your information should be declared to the main credit rating companies if possible. Lenders are more likely to review them, so if you only have one credit card and it is declared only to a small company, you are in trouble. This is the point where having more than one credit card or bank account, among others, can be useful.