For many otherwise hardworking and savvy Americans establishing and maintaining a good credit score remains a difficult and elusive goal. Between mounting credit card debt, student loans, and the myriad of other financial difficulties faced by today’s young people, achieving that 800 mark can seem like an almost impossible task. Luckily, there are some simple steps you can take, starting today, to dramatically increase (and maintain) your credit score. Before you give up on the idea of ever owning your own home or buying the car of your dreams, put some of these simple habits into practice:
Stay Up to Date on Your Bills
It may seem obvious, but paying your bills on time is one of the single most important factors when it comes to keeping your credit score healthy. Paying your bills on time over the course of time builds a solid foundation for your credit history. According to Denver, CO’s, Gershman Mortgage, this goes beyond credit cards and mortgage payments. Everything from utility bills, car loans, cellular bills, rent, and payday loans will all show up on your credit report if they’re not in good standing.
Apply for a Secured Credit Card
If you’re looking to build your credit and don’t have any (or your credit is poor for now) it might be a good idea to apply for a secured credit card. Much easier to attain than a regular line of credit, secured credit works by leaving a deposit with the bank that covers any charges that you will make on the card in the future. While a secured card won’t immediately improve your credit history, it will lay the foundation to show your growing financial responsibility and lead to an increased chance at approval for other credit cards or loans down the road.
If you’re dealing with bad credit to start with, the chances of being approved for a large loan of any kind are pretty limited. Without a proven credit record, lenders are reluctant to loan out any kind of significant amount, so your best bet is going to be to start with a smaller request and work your way up, proving your financial responsibility as you go.
Consider applying for a smaller loan or credit card with the help of a co-signer, which can help you establish and improve your credit history, provided that you maintain your repayment history in a timely manner every month.
Avoid Collections at All Costs
Late payments are bad, but allowing your accounts to go to a collections agency is a death sentence when it comes to your credit score. A lender doesn’t want to turn your account over to collections either, because they will only recover a portion of the original debt. Therefore, it’s in everyone’s best interest for you to work directly with the lender to resolve any problems as they arise. In most cases, contacting them directly is your best bet, and will result in a reasonable payment plan that you can keep up with and will lead to an overall improvement in your credit score and financial health.