Building a strong credit score should be one of a young adult’s first priorities. A good credit score will be a huge help when you begin applying for home and car loans. You can do a few things to make the credit-building process run smoothly—we’ve listed four ways to help build your credit score.
1. Never Miss a Payment
Keeping up on payments is one of the most important things you can do for a good credit score. Simply paying your bills on time is a great way to establish credit. If you pay off things such as your phone bill, car payments, and student loan payments on time every billing cycle, your credit score will benefit.
Keep a list of when each of your bills is due and refer to it often. If all your bills are due around the same time, you can call companies to see if you can get the due dates spaced out. Many places are very accommodating and can help you adjust your due dates.
2. Don’t Open Several Accounts at Once
Having well-maintained lines of credit is a good thing, but be sure to pace yourself when opening new accounts. Applying for a new credit card can cause you to lose a few points on your credit score, so if you open several cards at the same time, your score could take a larger hit. Be smart when you open a new card, and make sure to keep track of all your payments.
3. Don’t Close Your Accounts
A big factor in maintaining good credit is reliability. Time is the best and only way to build dependability. By having a well-maintained credit line open for an extended period of time, you’ll find that your credit score will continue to increase.
4. Spend Within Your Means
Sometimes we’ll pull out our credit cards when we’re in a bind and need to buy some extra groceries or an expensive textbook. Use your credit card when necessary, but make sure you’ve budgeted correctly so that you’ll be able to pay off your balance on time. Swiping a card is easy, but those numbers can add up.
What If I Need Good Credit Now?
Unfortunately, good credit is not something that comes quickly. This may be worrying to you, considering that your credit score can determine your eligibility for loans, the interest rate you receive on those loans, and even insurance rates. If you don’t have an established credit score yet but need a loan or affordable insurance right away—whether it’s for a new car or a home—you can use a few other options while you work on building your credit. Some lending companies are more lenient with credit scores, while some insurance companies are tailored for younger demographics and therefore don’t require as high of a credit score.