Everyone has a credit score based on their past financial performances. This number indicates your capacity to make mortgage payments and credit card bills. They better your score, the more credit you can secure.
How to Build Credit and a Good Credit Score
A bad credit rating can limit the borrowing options of a person. Defaulted payments and bankruptcy orders leave a black mark against one’s name. It is essential to start improving the credit score as soon as possible. It is tedious job demanding one’s time money and patience.
Steps to build a good credit score—
• Deleting Errors in a short time is the fastest way to correct errors on the credit report. This can be done through a bank or a mortgage company. Proper paperwork and proofs are required to prove that the item is correct. The credit will improve to a certain extent and allow loan at lower interest.
• Piggyback Someone’s Credit is a great credit score builder. This is done by putting someone else’s adds to one’s account. It is difficult to find a trusty person on whose account it can be added. But the trusted person could add the other person as a cardholder and not give the facility to operate his accounts.
• Playing Round Robin is one of the oldest strategies for credit building. This done by secured saving account or by secure credit cards. The new checking account is used to make payments on the new credit cards regularly on time. This way the credit score will improve because there are new perfect payment cards.
• Pay on Time will increase the credit score. Credit companies make lots of money when loans are not paid in time, but the credit goes down.
• Pay down Debts is a method that is not transparent. Paying off debt is different from managing the debt. Payment should be made only of the amount that will improve the credit profile.
• Never close accounts because the longer an account is open with no negative reports; it reflects a better credit score.
• No New Credit should be taken if the credit score needs to be increased. Each credit will call for an inquiry that is added in the report. This naturally drops the credit score.
• A fresh credit card will be helpful if credit is to be taken because there is no the new credit card. Possess 3-5 credit cards for different purposes to obtain personal credit.
Tips to build credit
Pay all bills in time to increase credit score.
Correct immediately if any errors are noticed.
Keep 2-3 credit cards and use them for different payments.