Credit is important for everyone. A person’s credit can affect many different aspects of their life, so they may look for ways to help build their credit. Fortunately, there are many ways that they can build credit. This article will discuss some of the best ways to build credit in 2019.
Understand Your Current Financial State, and Create Future Goals
Money management is important in regards to building credit. In order for someone to begin building their credit, they need to first have a clear understanding of how much income they have coming in, and how much they need for their current responsibilities. After they have created a plan that maps out their income, they can create space for the remaining cash to go towards building their credit. This extra money can be put towards their goals.
Next, they should set goals. Everyone has a goal that they’re reaching for, so they should write down a list of goals they hope to reach by a certain amount of time. By keeping track of their income and responsibilities, and writing down their goals, they are able to obtain a greater understanding of what goals they can reach, with the amount they can afford to spend.
Understand Your Current Credit and its Needs
It is important for someone that wants to begin building their credit, to know their score and understand it. They should get their report to ensure accuracy and understanding. They should check their credit score to better understand what needs improvement. They could do this through many free sites. In order to improve their credit, it is important to know the important factors that affect it. Payments are especially important in terms of affecting their credit. It is important to ensure that they make their payments on time, or it could negatively impact their credit. It is important that they focus on making their payments on time, consistently.
On the other hand, someone may have limited credit and their goal may be to establish credit. They could do this in many ways. One way is through a secured credit card, in which they would make a cash deposit on the card and treat it as a credit card. Just as someone trying to improve their credit, in order to establish credit with this secured credit card, they will need to make their payments on time consistently and develop a great payment history.
Understand Your Credit Cards and Their Balances
Credit cards are very influential to credit, so it is important for someone who wants to build credit, to stay on top of them. They should always make sure that they know and fully understand their limit on their credit cards, stay below their limit 35 to 50%, and ensure that they make payments on their credit cards, on time. It’s important for them to stay below that limit, so it’s important to watch it consistently.
For someone trying to establish credit, their secure credit card should be treated similarly. By using this card and treating it as a normal credit card, they are helping to develop the opportunity for them to be able to qualify for a normal credit card in the future.
Understand Other Ways to Build or Establish Credit
There are other ways that they can establish credit if they need to, as well. They could have a co-signer to co-sign a regular credit card or a loan, someone they know could authorize them to be a user of their card, or they could obtain a credit builder loan which could allow them to pay down on a loan without receiving the money.
There are other things that someone trying to improve their credit should keep in mind. They should avoid the urge of opening up a bunch of new accounts and closing too many accounts. Both of these things can have a negative impact on your credit. It is best to maintain their current payments and bills, and reframe from creating too much more. By creating more it could possibly cause them to lose track of their debt, and become behind on their payments which will negatively impact their credit. Closing accounts can also affect their credit as well, so it is best for them to maintain positive, active accounts.
Overall, it is important for someone trying to build their credit to monitor their credit, remain on top of their responsibilities, make their payments on time, keep track of their debt and credit card balances, understand their current financial state, and set goals towards improvement.