If you search for the term “credit score” online, there is no shortage of information on how to build credit history, view your credit report or check your credit score. But who has the time, patience and focus to read through more than 38,000,000 search results? Here are some tips to help you build your credit history.
1. Learn About Your Credit Report And Credit Score.
Payment History
Approximately 35 percent
“Maintaining a positive credit history has the biggest single impact on building and maintaining good credit health,” Clifton M. O’Neal, formerly of TransUnion says. “A positive credit history means paying the minimum or more on your credit obligations each and every month.”
Credit Utilization
Approximately 30 percent
Your FICO score does not consider your credit limit by itself. Instead, the FICO score considers your “credit utilization rate,” which is calculated by dividing an account’s outstanding balance by its credit limit.
Length of credit history
Approximately 15 percent
Establish credit early. The longer you have a track record, the better.
Managing new accounts
Approximately 10 percent
Think twice before signing up for a new store credit card. If you apply for new credit frequently, credit companies may view you as a riskier client, especially if you haven’t been handling credit for very long.
2. Learn How Credit Cards Work — And How They Can Work For You.
You’ve spent enough years only “sort of” knowing how credit cards work. It’s time to change that. Understanding basic credit card information helps you take advantage of their benefits. Understand the fine print. Not sure of the difference between APR, variable rate, and prime rate? Learn more about nine of the most important credit terms — so you can decode the fine print on credit card disclosures and offers. Get the most from your credit card. Does your card provider offer tools to help you build credit responsibly? Are you sure you’re using the best credit card for your lifestyle? Could a secured credit card like the Citi Secured Mastercard help you build credit? Visit Citi’s credit card comparison tool to find out.
3. Put Your Credit Health On Cruise Control.
Consistency is the key to building healthy credit history, so automate your finances to act on your behalf. Quit paying bills manually. Consider switching your bills to auto-pay. You’re less likely to miss a payment due date if funds are automatically withdrawn from your account to pay off your balance each month. Just remember: Systems break down and card numbers expire. It’s important to check in on everything once a month to make sure you’re on track and can make adjustments as needed. Stay alert. Get text or e-mail alerts from your credit card issuer when payments are due, when payments are made and when you’re reaching your credit limit. Be methodical about paying off debt. Whether you’re a college student struggling with loans or a shopaholic who refuses to read your credit card statements, paying off debt takes commitment. If you’re serious about paying down your debt, it’s important to first take stock of your finances, figure out how much you owe and develop a plan for making payments each month to get yourself back on track.