Over the course of our lives, most of us will need to be able to secure a loan for a house, car or other big purchase. That’s why it’s never too early to start thinking about making your credit score the best it can be!
Here are a few tips to help you start building a healthy credit history TODAY:
- Verify that your credit report is correct. Your credit report illustrates your credit performance, and it needs to be accurate so that you can apply for loans. Everyone is entitled to receive a free copy of their credit report annually from each of the three credit reporting agencies, but you must go through the Federal Trade Commission’s website at www.annualcreditreport.com or call 1.877.322.8228.
- Pay your bills on time. The more bills you pay on time, the better your credit score. Try setting up auto-pay on as many bills as you can so you never miss a payment!
- Keep balances low on credit cards and ‘revolving credit.’ Racking up big balances can hurt your scores, regardless of whether you pay your bills in full each month. Often, you can increase your scores by limiting your charges to 30 percent or less of a card's limit.
- Apply for and open new credit accounts only as needed. Keep this in mind the next time a retailer offers you 10 percent off if you open a credit account with them. If you do NEED a new line of credit, don’t jump at the first appealing offer. Compare rates and fees from different institutions.
- Don’t close old, paid off accounts. Closing accounts never helps your score - in fact, it can damage it.
- Use unexpected cash to pay down debt. Lowering your debt balances is always good for your credit score. Instead of splurging, use unexpected influxes of cash to pay down high-interest debts!
- Talk to credit counselors if you’re in trouble. Using legitimate, non-profit credit counseling can help you manage your debt and won’t hurt your credit score. For more information on debt management, contact the National Foundation for Consumer Credit (www.nfcc.org).
