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Starting From Scratch: How To Build A Strong Credit Score
If you’ve never had a credit card before, you might be surprised to learn that you have a poor credit score. This can make it difficult to get that first credit card you need, and can be worrying, if you’re caught by surprise by the low rating. But don’t worry: a poor credit score due to not having an established credit history is much easier to overcome than a poor score because of something like a bankruptcy or defaulting on a credit card.
Here’s how to build a strong credit score that will allow you to get that great cash back credit card you want, or a travel rewards card, or a low rate on a mortgage or car loan.
First, you’ll need to get some sort of credit card. If you’re not able to qualify for a card like a student credit card, you can always get a secured credit card instead. This type of card requires you to put down an amount as collateral, which will then be your credit limit. In case you default on the amount you owe, the issuing bank is protected, because they are holding your deposit. But if you pay your balance off each month, they will report that to the credit bureaus, which will begin to establish your creditworthiness and slowly improve your credit score.
The most important thing to do, once you have a credit card, is to always pay your balance due on time each month. Paying off the entire balance in full is always preferable, so you don’t end up paying interest, but if you can’t do this, make sure to pay the minimum due by the due date. You can set up an email or a text alert to remind you that your payment date is coming up; even better, you can set up automatic payments to come out of your bank account each month. You can set this to be the minimum payment, or the full balance due.
Many cards also let you choose your own payment due date, so if the payment is due at the end of the month, and you get paid at the beginning of the month, you can adjust the due date to match up better with your pay schedule.
Paying your bill on time each month will put you on the road to a great credit score; before you know it you’ll have that creditworthy rating you want.
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