3 Surefire Ways to Build Good Credit

What are the different ways to improve credit score?

For the most part, everybody understands that credit is an indispensable part of daily life.  But even with this knowledge, there are many people who make some bad mistakes when learning how to use credit.  The older you get, the likelier it is that you’ll need credit to survive.  Which is why figuring out how to build good credit at a young age is an important foundation for financial success.

Start Strong, Finish Stronger

Personal Finance Expert Latoya Irby suggests that, “Using your credit wisely, and responsibly, is what helps you to maintain a good score. The more you know about what goes into your credit score, the easier it will be to maintain a good one. Five key pieces of information are used to calculate your credit score—your payment history, level of debt, credit age, mix of credit, and recent credit.”

Here are a few quick tips on how to use credit the smart way:

1) Use Credit in the First Place

It’s easy to assume that never borrowing money is a good thing, because it means you’ll never default on any payments.  But this is not the case.  Spending many years of your adult life without a credit history actually makes lenders skeptical in future.  Sign up for a credit card if you don’t have one, and use it in a disciplined way.

2) Avoid Using More than 30% of Your Total Credit Limit

Just because you have a credit card, doesn’t mean you have to use the entire limit.  In fact, the closer a card-holder gets to the credit limit, the more of a lending-risk they become.  Regardless of how it is you spend your money, try not to exceed 30% of your total credit limit unless there’s an emergency.

3) Never Miss a Payment on Outstanding Balances

Forgetting to pay the minimum balance due on a credit card is a big no no.  Doing this entitles lenders to assume that you can’t afford to service debt.  As soon as you sign up for a credit card, set up autopay features online.  Automatic payments guarantee that you won’t fall behind on outstanding obligations.

Conclusion

Unless you live under a rock, it’s virtually impossible to live life today without relying on credit.  Credit is such an integral part of people’s finances, that we all use it for one reason or another.  We use it to buy daily provisions, we use it to pay for amenities, and we even use debt to pay for shelter.  Not knowing how to build good credit, can paralyze your life completely. 

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