How to Build Credit in 5 Simple Steps
A healthy credit score can make life much easier and enjoyable. Unfortunately, many people don't realize how important a credit score is to getting the things they want most out of life. Like a new car or a their dream home. Missing a payment on a credit card or allowing a bill to go to collection can have long lasting effects on a credit report. Negative marks on a credit report can cost several points and when it comes to a credit score. Every point counts. It is time for everyone to learn how to build credit again and achieve those dreams that they had years ago.
Here are Ebony's 5 tips to rebuilding credit:
-Make a conscious effort to pay all bill on time every month, even if it is only the minimum balance. If it's impossible way to make the payment, call the creditor and ask for an extension. A five to 10 day extension may be granted if a promise to pay is given usually with a checking account number or debit card number.
-When thinking about how to build credit, consider opening a secured credit card to begin the rebuilding process. Charge only what can be paid off within a month or two. Avoid charging more than 30 percent of the total credit line in a single month. Meaning, if the card has a $300 credit line, do not charge more than $90 in a single month. Fees and interest must be considered.
-Do not apply for numerous new accounts within a short period of time. Every hard inquiry negatively impacts a credit score. Creditors view it as a bit of a sign of desperation and will hesitate granting a new credit line. Stick with the current cards presently open and work at establishing a positive payment history.
-When rebuilding credit, it is important to stay informed of any changes on a credit report. A credit report should be pulled every six months to check for any negative marks as well as movement on the credit score. Ideally, if a person pays each of their accounts on time every month and does not have any negative remarks reported, the credit score should start climbing upwards. If there are unwarranted negative marks, take immediate action to have them removed.
-After 12 months of paying bills on time and carefully managing open credit lines, it is a good time to apply for an unsecured credit card. Try working with the company who holds the secured credit card. Make the call and ask to be switched to an unsecured card. If it isn't possible, only apply for one card through another bank.
It is possible to recover from past credit mistakes. For those who want to know how to build credit, follow these five simple steps and remember patience is of utmost important. Good things do come to those who wait. A damaged credit score does not have to be permanent. A little diligence and patience is all that is needed to begin the rebuilding process.
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