How to Build Credit in (Exactly) 250 Words
What credit is:
Your credit reports are records of how you have repaid debt in the past. Credit scores are three-digit numbers that estimate how likely you are to repay a lender or card issuer as agreed in the future. A “credit check”
may look at either or both.
Why it matters:
Good credit gives you a better shot at borrowing money at a favorable interest rate. It can also mean lower car insurance bills and lower or no utility deposits.
How to begin:
Start using credit, which is easier said than done. See if you can get a credit card, perhaps a secured credit card
to start. Becoming an authorized user
on someone else’s card may help. Student loans, car loans and credit-builder loans
also build credit history.
Do I have to go into debt?
No. One of the best ways to build credit
is using a credit card lightly and paying the balance in full every month.
Understand your score:
Most credit scores are on a scale from 300 to 850. It’s smart to monitor your score; you can get a free credit score
from some credit card issuers or personal finance websites, like NerdWallet.
Know what affects your score:
The biggest things you can do to boost your credit are:
- Pay bills on time, without exception
- Use little of your credit limit (under 30%, and under 10% is better)
Other things help, too:
- Have both credit cards and loans
- Keep older accounts open
- Limit applications for credit
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