If you want to purchase a house or car someday, one thing that you’re going to need to have is good credit. That is what sends a message to your potential loaners or creditors that you are responsible with money – that you pay your bills on time.
If you’ve made a few credit mistakes in the past and you’re curious to know about some of the things that you should do in order to establish your credit and also keep it intact, here are five tips that can help you to do just that.
Get a secured credit card. If you don’t have a credit card, there are some benefits to that. The main one being that since credit cards are basically plastic cards that come with interest, if you purchase things with cash, you decrease your chances of going into debt. So, what is the advantage of having a credit card? Well, one of the main ones is the fact that it’s one of the most effective ways to establish credit. That said, one card that you can get that will help you to use credit responsibly is a secured credit card. Being that it’s tied to your account and it has a lower limit, that will essentially help you to pay your balance on time.
Stay within your limit. Speaking of limits, one mistake that a lot of people make is not staying within their credit limit. The reason why this is a problem is because if a credit card company reports that you are spending above your limit and it’s not paid off in a timely manner, that sends a red flag that you may be having problems paying off your balance.
Pay your bills on time. Something that you can do to both establish and maintain good credit without using a credit card is to pay your bills on time. That’s right. When you pay your mortgage, rent and utilities in a timely manner, those reports also go to the various credit agencies. That’s the good news. The not-so-good news is that if you don’t pay your bills on time, that gets reported too and it can lower your credit score.
Check your credit score. If you were to go onto a website like CreditCardXpo.com for tips on how to maintain good credit , one thing that it would probably recommend that you do is check your credit score. That way, you can make sure that everything on your credit report is accurate. Plus, if there are issues, you’ll know exactly what you need to do in order to improve your credit score. For tips on how to improve your credit score, visit Forbes and put “improve your credit score” in the search field.
Establish clear goals. You know the saying: If you fail to plan, you ultimately plan to fail. This couldn’t be truer than when it comes to your finances. You don’t want to get into the habit of being an impulse shopper, so definitely save up for major purchases. That is one way to avoid relying so much on credit and potentially damaging your credit.