A guide to building credit

Credit score affects your ability to get loans, mortgages and other credit. There are three credit reports that you need to keep an eye on. Some lenders check only one of these reports, while some will check all the three. Even one low score can keep you from getting the home or car loan that you need. The good news is that you can build or rebuild your credit. In this article, e will give a guide to build or rebuild your credit.

Get a secured credit card

Almost anyone can get a secured credit card, so they are ideal for someone trying to build credit. Even if you have had terrible credit in the past or are brand new to credit, you should be able to get a secured card. With this type of card, you will give the lender a deposit of a certain amount of money and they will send you a credit card which has a credit limit which is equal to the amount of your deposit.

Pay off your secured cards on time each month and check your credit rating

Paying off your card each month is important to keeping your debt to a minimum and keeping the usage on your cards low. The cards you have at this point will likely be low limit cards, so it can be easy to maximise them out with interest. As you keep up with your payments, your score should rise and open up more opportunities for you.

Apply for an easy to get unsecured card, once your credit rating has risen

There are premium cards, like low interest rewards cards for which you are not ready yet, but you may be able to get approved for a low limit store card. This will help you build your credit even further.

Continue building credit and paying your cards off each month

The total amount of credit you have versus the total of credit you have used is call utilisation. Your utilisation and your payment history will be big factors when it comes to keeping your new credit rating. One late payment can mean a decrease in the credit rating that you worked hard to build.

Ask for a credit line increase, if you have not already received them

This is not to get yourself into more debt, rather it is to help with your overall utilisation. Be careful though if your goal is to get a premium low interest rewards card. You do not want to be denied because you have too much credit.

Keep credit inquiries to a minimum

Too many of these can negatively affect your credit rating and they stay on your report for two years.