How to build good credit

A good credit score is like a good grade that you get in school. You are lauded by your teachers, classmates, and parents. A good credit score opens your gates to getting instant acceptance for job placements and apartments for renting. Building credit takes time, and the triumph of getting a good score is definitely worth the effort. And good credit gives you bargaining power with the lending institution. Getting a loan at better rates and credit cards with better terms is likely a distant dream.

Typically Credit scoring occurs in the range between scores of 300 to 850. The higher number denoting a better credit score. Any score higher than 670 is considered a good score.

With a great score come excellent benefits. It is also essential to have an excellent score to maintain sound financial health. Building a good credit score is not rocket science. All it takes is a carefully disciplined approach towards the use of credit facilities. Credit cards Credits cards are the easiest way to set-up or rebuild your credit scores. Banks and other institutions usually do not follow a rigid process to issue credit cards. They have a plethora of options available. Once you obtain a credit card, use it diligently and pay bills on time. You have the option to put down a certain amount in your bank account that will be locked under a lien.

Say the Financial Institution issued a card with a limit of $ 1,000. It simply does not mean that you have to use up the full $1,000 during the month. As per utilization viz-a-viz, credit score trends in the FICO system, a credit card limit utilization of under 30% is considered a score booster. This means that for a card limit of $1,000, you should not allow yourself to spend beyond $300 at any point in time. Checking your Credit Report regularly – It is prudent to check your credit report regularly. It contains your credit history, which is a record of your good, bad and ugly decisions about your personal finances.

Apart from credit cards, auto loans are also relatively easy to take out. In case your scores are low, you can have a co-signor who can literally lend you their good credit score. Repaying the installments on an auto loan will help build your credit history and, in turn, good credit scores.

While these are a few ways to build a good credit score, we have plenty of other options to discuss in the following links. Click on the following to begin the discussion.