How to Build Good Credit
Check your credit score and look for any inaccuracies. If you have a student loan, that information will appear on your credit report.
A good way to build credit is to apply for a credit card. Credit cards are essentially open revolving lines of credit. Keeping a card open for years even if you do not frequently use it will help by building credit longevity. Several points to consider when opening a credit card:
- Try to locate a no fee card with a reasonable interest rate.
- Put down a deposit for a money secured card if an unsecured card is not approved.
- Strive to never miss a payment.
- If you do carry a balance, keep it around 30% of your credit limit or less.
After one year with the credit card, look at opening an installment loan or second credit card. Take into account these factors before applying:
- You should have established a score, make sure you check it.
- If you apply for a car or personal loan, make sure the payment is within your budget.
Another option to help increase your credit score is by adding alternative data to your credit report. eCredable Lift® or Experian Boost will allow you to link eligible utility accounts and upload the payment information.
Now that you have established your credit, keep your credit score on the up and up. Listed below are pointers for maintaining a good score:
- Pay your bills on time, this equates to 35% of your score.
- Be strategic in your credit card usage. 30% of your score looks at the balance of your credit accounts versus the limit on the card.
- Use different types of credit (credit card, installment loans and a mortgage). The different types of credit you have is 10% of your score.
- Do not open too many accounts or cards too quickly. Accumulation of debt in the last 12-18 months is 10% of your score.
- Do not close your credit card accounts. Longevity of your credit is 15% of your score.
Contact a Loan Specialist at Transcend if you have further questions about how to build your credit. We have a track record of helping our members achieve a high credit score. This makes a difference in your financial well-being.