Credit scores are an ever-present part of financing a modern life. If you have a good credit score, it can save you thousands of dollars in interest on a home, a car, or another type of loan. Credit shows up in background checks for jobs and renting property, too. Even if you're trying to start a business, there's a good chance the issue will pop up at some point.
Given how ubiquitous credit is in American society, it's important to know how to foster it. Follow these three tips to steadily improve your credit score.
Start Building Credit ASAP
Both having and using credit is important. Your potential lenders want to know you have a history of maintaining credit, using it, and paying in a timely manner. They can only learn that about you if you are actively utilizing your credit.
For younger folks and people starting over from bad credit, the big thing is to find a credit card that fits their circumstances. A store credit card is often a good starting point. They usually have low limits so you can't go wild. Likewise, if you get one for a store you frequent, you're more likely to make regular use of it.
Monitor Your Credit Online
Building your credit is not unlike constructing a house. You need a plan. Before you make your plan, though, you need to know how good the ground is where you plan to build.
In terms of credit, that means know what's hanging out there that might be hurting you. Sign up for online credit monitoring tools so you can start surveying the situation. You might be shocked to find that debt was inaccurately attributed to you. There also could be things on your credit record that should have come off but haven't.
You may have to contact creditors to get some of these items off your report. In some cases, the reporting agencies will do it if you can prove the listed item doesn't belong there.
Request Credit Limit Increases
If you have $5,000 worth of credit limits and $2,500 of debts against them, your utilization rate would be 50%. Lower is always better, at least as long as you're using your credit lines.
How do you lower your utilization rate if you don't want to cut back on spending, though? One way is to ask for a credit limit increase. Wait until you've had a card and paid on it for at least half a year. Once you've proven yourself to be a good customer, ask for a limit increase.