Skip to main content

Understanding Credit Building 101

A good credit score goes a long way toward building the future you desire. The best time to start building good credit is while you are young; starting from nothing and working toward good credit is easier than trying to repair bad credit. Nevertheless, many of these steps are the same, and anyone interested in obtaining an excellent credit score should consider them.

Little Things Mean a Lot

One of the most basic ways to improve your credit is by paying bills on time. Take note, “on time” means not even one day late. Utility companies, cell phone providers, and your apartment manager all report your payment information to the credit agencies. When prospective creditors check your report, you do not want them to see any late or missed payments. Pay on time, every time. 

Your Bank Account

Be sure you have at least a checking account; a savings account is an added plus. This is helpful for making timely payments because you can arrange an automatic draft from the account, and your bills are paid for you each month. When you are choosing a place to open an account, consider a credit union; they are a bit more lenient on extending credit than the banks, and the terms can be more budget-friendly as well.

Store Credit

When you have no credit, it is hard to get a credit card. Stop and think for a moment, however. Do you really want a credit card? The answer should be no. Credit cards can lead to worrisome debt quickly. The best way to safely build credit is to use a retailer’s card to make small purchases that you pay off right away. Store cards are easier to obtain than big name credit cards. However, never let yourself think that you can afford something just because you can make a minimum payment; that’s the number one way to get in over your head.  The exception is getting a low balance “secured” credit card and making 2-3 times the minimum payment each month.

Loan Co-signers

If you want to buy a car but have no credit history, you may be required to provide a co-signer. This means that if you do not pay as agreed, the lien holder will go after the co-signer for the debt. This is not a position you want to put anyone in, but sometimes it’s the only way to get the loan. Once you have paid off a loan that was co-signed, you will most likely qualify for a future loan on your own next time. Remember, nobody enjoys being a co-signer, so don’t let yours down by making any late payments.  For long-term loans, consider restructuring the loan after one year in order to release the co-signer.

An Action Plan

Many times people develop bad credit because of situations beyond their control. One thing that must be done to repair bad credit is to pay off debt. A good example of a simple “debt repayment plan” is to take the account with the smallest balance and work toward paying it off. It won’t take as long this way because the starting balance is small, and it is satisfying to see the bill go away. Then take the money you were paying on that account, and add it to the amount you are already paying on the next smallest balance. Keep this up and you will quickly see the light at the end of the tunnel.

Final Thoughts

Building a good credit rating takes work, sacrifice, determination and willpower. It is something that is within everyone’s reach, but many times it is not a fun process. Remember that good credit offers you a feeling of security, and the opportunity to creative the life you want to live. Work diligently to build and maintain your good credit, and always keep your financial goals in sight.


Popular posts from this blog

Why it’s important to save for retirement

While retirement may seem far off in the distance for some, financial experts say you’re never too young to begin saving.  In fact, the earlier you calculate your retirement needs and start building your nest egg, the easier it will be to create a viable plan for the future. Many experts advise you begin saving a percentage of your income for retirement as soon as possible, no matter how little the contribution may be, as it’s possible the Social Security benefits millions of people currently depend on may be in jeopardy.

Low interest credit cards - how to make them work for you

Credit cards are borrowing instruments, unlike debit cards where you already have the money. Banks are there to make money too. Just like high street stores, they hope to maximise their profits within the rules. So it’s important to understand the basics and find a credit card that’s right for you – you can compare low APR credit cards here . Now you know the rules, let’s find out how to play the game. The financial services industry charges interest on the money that it lends out. Let us assume you borrow £100 on your credit card and keep it for exactly one year before you pay it back. For the purposes of this article, we will assume your loan attracts 8% interest per year, which is the Annual Percentage Rate, or APR for that particular transaction. Practical example

Brief Overview of Credit Card Machines

The world has witnessed so much of modernization eliminating the cash transactions from businesses. These days we have all sorts of online transaction which is popularized by the help of credit card machines. This is a device that can do transactions with a debit card or a credit card. Credit card machines securely transmit funds from one account to another. It is a Point of Sale terminal that can do transaction with a credit / debit card. This machine allows a merchant to insert, swipe, or key in manually the required credit card information and transmit such data to the merchant service provider for consent and then later on the transfer the fund to the merchant. It is used by merchants to directly capture card information instead of manually entering it in card details. Credit card machines are efficient enough to provide the benefit of decreased transaction processing times.

Four Things to Know About the Housing Market in 2021

Due to the Covid-19 pandemic, the increase in the number of people working from home as well as the initial ban on property transactions in the first lockdown, the housing market in the UK was majorly affected. After the first lockdown, the housing market restarted in the UK and was allowed during the second and third lockdown. The government introduced the stamp duty holiday which definitely helped boost the housing market as well as the buyer's confidence, and due to its overwhelming success, this scheme has been extended till July 2021. Even though the demand for homes increased, the average price of property rose in certain areas and government schemes worked like a charm, the housing market was nowhere close to where it was before the pre-Covid era. While no experts can predict with any amount of certainty the future of the housing industry in the UK, here are the four things that you need to know about the housing market in the UK in 2021. Increase in demand for properties in

Peer-to-peer Lending Oprions for Students

Is peer-to-peer lending safe? Going to college is necessary in this day and age if you hope to get a good paying job. However, finding the money to do so isn’t always easy. One method of getting money for college is to take out a student loan from the government. Another is to go a private lending institution, such as a bank or credit union. A third method, and one that is becoming more and more popular, is to get a loan from a private individual. This type of loan is usually called peer-to-peer (P2P) lending. Following are a few options for students who are seeking a peer-to-peer loan. What Is Peer-to-Peer Lending? Peer-to-peer lending is essentially a financial agreement that takes place between individuals. One party, you, borrows money from someone else. It works the same way as a traditional loan because unlike a scholarship, grant, or gift, you will be expected to pay the money back, on time, and with interest tacked on. You and the lender agree on how much will be paid back wit

Responsibilities a Property Management Company Needs to Handle

When you are considering investing in a residential or commercial property, you need to plan a number of things. At such times, getting help from the right professionals may be of immense help. You may consider opting for property management companies for handling the responsibilities. Understanding the tasks, before and after the purchase, these companies handle is necessary before you employ them.

Why comparing ISA rates is a necessity?

Investment is not about the capital you put in an account, it is your ability to judge risk and return trade-off. Unless you weigh your decision carefully you may end up making no profit. Choosing the best ISA provider therefore could be a difficult task. If you are investing in cash ISAs you must have few hundreds of options to test the best. One should compare ISA rates for the bigger return. But who can help you on this? How do you know which Cash ISAs is giving better interest rate? What are the terms and conditions? Who are the account providers? Are these accounts easily accessible? What others are talking about those ISA accounts?  How advantageous cash ISAs could be in terms of risk coverage?