Having bad credit will keep you away from fulfilling your desires like buying a home, getting a job and financing your education. That is the reason to build good credit history quickly is important.
To take a start with your first credit card, everything you perform using the credit will become the part of your credit history. If you want to build or maintain your credit history, it is compulsory to use the credit responsibly.
- Use Only a Small Amount of the Credit You Have Available
To maximize your credit cards, or coming even close to it is a careless act if you will not schedule to pay off your full balance within a month.
The Lenders have an idea that the borrowers who usually maximize their credit cards face difficulty in repaying the amount, which they have borrowed.
This will also affect your credit score when you hold a large amount of credit card balances and is not able to pay them off. To build a good credit you need to make sure that your balance is below 30% of your credit limit.
- Start With Only One Credit Card
Within the first few years of using credit, most of the credit card users collect different credit cards. This will leave a negative impact on your credit history; don’t do such mistake by opening up too many credit cards.
If you will have more credit then it will become hard for you to hold up your balances and payments.
Your credit score will be affected badly with too many inquiries into your credit and with too many credit cards. The credit inquiries are 10% of your credit score and by opening new credit cards will decrease your average credit age and it is also 10% of your credit score.
Before applying for an additional credit card, make sure that you have enough knowledge to be responsible with credit.
- Only Borrow What You Can Afford
To buy the things which you can’t afford is not the purpose of the credit card. If you do so you can get yourself into the debit and credit trouble quickly.
One of the best technique to build good credit is to charge only what you can afford. In this way, future creditors and lenders will come to know that you are a responsible borrower.
This will help you to borrow the money and in getting a new credit when your credit report will indicate that you only borrow the amount which you can afford to pay back. To avoid yourself from a large amount of debt by paying what you can afford is not the only technique.
Same rules are applicable to loans. Despite the prevailing circumstances of what the lender says you are qualified for only borrow the amount which you can repay. Before applying for the loan, go through your budget to check what amount you can afford each month. Take notice that the loan amount should be less than the amount you have come up with.
- Make All Your Payments on Time
Your credit report do not mention all of your monthly payments, so if you will make your payments on time than it will not affect your credit.
If you will become the delinquent and the account is forward to the collection agency of the third party then any bill can potentially end up on your credit report.
To build a good credit score keep the negative accounts away from being added to your credit report. To overcome serious delinquency like a debt collection can be hard.
- Pay Your Credit Card Balance in Full
If your credit card bill is the amount which you can afford then each month pay off your credit card balance in full will not be a problem for you. If you will pay off your bills every month then this will indicate that you are able to pay all the bills and this is the most important thing that creditors and lenders want to see.
The large portion of your credit score is reserved by the timeline of your payments so making your payments on time will improve your credit.
- If You Carry a Balance, Do It the Right Way
To carry a balance on your credit card is not a bad thing as long as you do it in the right way. To pay your balance quickly, pay more than the minimum amount each month.
Don’t make the late credit card payments and make sure that your balance is at a reasonable level that is below 30 percent of the credit limit. If you will take care of all the given instructions then your credit will not be affected on carrying a balance.
- Let Your Accounts Age
If you will carry a credit for longer period then this will be better for your credit score. To increase your credit age and to build good credit, leave your older accounts open.
When you will close your accounts, it will not remove your credit report immediately. However, after some years the old closed accounts will be dropped by the credit bureaus from your credit report.