A credit score helps lenders predict how likely you are to pay back a loan on time. A good credit score makes it more likely that you can get a loan for big purchases, a better interest rates, and overall helps you to save money on purchases that you want to finance over time. If you have no credit or poor credit, you might be wondering "Well, how do I build good credit?" Getting started is the hardest part because to build credit, you need credit. But building credit, while daunting, can happen quickly once you make the proper first steps.
The easiest place to start building credit is with credit cards. You can apply for a secured credit card with a higher credit limit. These cards are targeted to those who are new to credit and are easier to get approved on than unsecured credit cards. Once you are approved, it's important to remember not overdo it on spending and to limit the number of cards that you have. Keeping a low credit balance and, most importantly, paying your credit card bills on time is the best way to ensure that your credit is on the track to perfection. Your credit score when you first start can take up to 6 months to populate, but you will find that once you have a score, purchases that involve lenders and credit become much easier.
Building Credit 101
Building credit is an important step in achieving financial stability and independence. Building your credit can take time and effort, but it is possible with the right strategies. About 20% of Americans have credit scores below 600. Having poor credit can make it harder to apply for loans and credit cards, renting an apartment, and can reduce your options when looking at cell phone providers. We have created a guide on how you can increase your credit score and start making credit more available and affordable to you.