Having a good credit score can open doors for you. You can get better rates when purchasing a house or vehicle; renting an apartment, taking out an insurance policy, buying expensive gadgets and even help you land a good job; if you have good credit standing.
This being said, it is therefore of utmost importance that you build good credit. How do you go about it if you don’t have a credit history?
How to Build Credit
1. First of all, you should check your credit history. Sure, as far as you’re concerned you have never bought anything through credit but an unscrupulous person may have been using your identity or you may have the same name as someone else so it’s best to check that you have a clean record.
2. Open a bank account. A good way for creditors to give you a shot is to prove to them that you have existing money stashed away in the bank. Opening a current and savings account will help you build good credit.
If you can’t open a bank account on your own, try opening one with a family member who has good credit, as a joint account.
3. Pay your bills on time. Another excellent way on building good credit is to pay all your bills on time. One late payment, even if it’s only a day late, will already create a ripple effect on your credit standing.
By proving to possible creditors and other financial institutions that you have the capability to pay all your bills before or on the due date itself, you are establishing the fact that you know how to handle your finances.
4. Use retailer credit cards. From time to time, retail outlets will offer you their own credit card particularly if you are a frequent shopper. This is a good way to start building good credit standing as others will see you as someone who can be trusted with a credit card.
It is important however, that you likewise pay all your bills on time and give full payments whenever possible. You should also be careful not to max out your credit card. If you can help it, use only about ten percent of your credit limit or thirty percent at most.
5. Get someone with good credit standing to co-sign for you. Finally, to prove your good character and trustworthiness, ask someone to co-sign a loan for you. Creditors will see that if someone of good credit standing can trust you, they can trust you as well.
