How do you build up your credit score?
I want in the future to walk into an establishment, with them knowing that payment is coming.Not only that but, giving me what is consider above average waiting time to make a first payment? #financial-services #japan #public-relations #corporate-finance #coordinator #change-agent
Hi there, this is a good question. Credit is very important in the USA, but there is so many ways that you can improve your credit score, in that way you can asure a seller that you have the money to pay for what you want when you have the money.
If you are young or just starting in this country you can start your credit asking your bank for a savings/credit card. This card works like a debit card but will give your the points to build your credit. Your credit limit will be the same amount of money that you will put in the card. So you put money and you can spend money. It's safe because the bank wont allow you to spend more than what you have like the credit cards.
Another way to establish credit is with a big purchase like a car or a department store card. This is a little dangerous since is a big spend but if you are discipline and pay on time your credit will start rising.
And last but not uncommon is paying rent or services with a credit card that has low interest. You must be very discipline with this method because one miss payment and it can ruin your rent history, but basically if you have the money for your rent or paying your services you can add it to your credit card (preferable one that gives you points) and pay of the credit card because you already have the money.
Like any investment in life there is certain levels of risk and you have to be very discipline to build up your credit and establish that trust when you want to buy something.
Good luck!!! and Be Discipline
Great question. Having a great credit score is critically important for many reasons - getting the credit you need, getting a good interest rate, and maybe even getting a job (yes, prospective employers may check your score!). The single most important thing you can do is pay all of your bills ON TIME - EVERY TIME!! Don't ever miss a payment, whether it's a mortgage payment, car payment, utility bill, student loan or credit card. Also, try to have a reasonable amount of credit cards - more than one, but not too many. And never spend money that you don't have or can't afford. That will just get you into trouble and start you down a path that will be difficult to get out of. And remember, if you ever get into a situation when you're considering personal bankruptcy, your credit score will be ruined for a long, long time. So, start smart - only spend what you can afford and never miss a payment. As for wanting an "above average waiting time" to make a first payment, well, forget it. It won't happen. You may be able to ask for your payments to be due at a specific time of the month, but that's it. Remember, if you can't afford to make the payment when due, don't spend the money or get the credit! Good luck, and spend wisely!!
The real key to building credit is making sure you don't have late payments and basically not living beyond your means. So how you manage the use of the credit is key. A great way to build up your score is to go ahead and get ONE credit card and make sure you pay it on time. I know sounds easy right? Getting a credit card does NOT mean "wow I've got credit so let's go out and paint the town red and buy extravagant gifts for everyone!!"
Use your card, to make your regular purchases. At the beginning, go ahead a write a check or make an online payment right away. Make payments purchase by purchase just as if you were paying with cash at the time or at least every week. Some banks/companies have restrictions on how often you can pay online so the old fashioned check route may be the way to go. Continue this process until you have disciplined yourself to know how much you have spent and know that just because you have checks left doesn't mean you're not out of money, also if you are checking your balance at the bank, you have to remember to allow for checks you have written that may not have cleared the bank yet. Making continual payments like this ensures your payments are not late and you are using your credit responsibly. Do not get a "store card" every time they offer you so many dollars off for opening one. The additional cards create inquiries on your history, the more inquiries there are, the more your credit score goes down. After you have established yourself with one card, go ahead and get a second, and keep this one for more of an emergency basis. Everyone gets that emergencies happen and you may have to occasionally carry a balance, but ALWAYS be sure to make payments. If you can afford to pay 500 pay 500 even if the minimum is 50. Credit card companies love it when you only make minimum payments because they make a lot of money that way, but always at least make the minimum payment. Good Luck!
When I first started on the journey of building my credit, I was unable to get a credit card because I had poor/unestablished credit. My first step was to open a "secure credit card" through my bank. Essentially you put down some of your own money and that becomes your credit limit. After x amount of months (generally 6-12) of making your payments on time, your card is converted to an actual credit card with that limit and your money is refunded. From there, continually making payments on time will further enhance your credit score. Secure credit cards also help to build credit faster than other methods, or so I've heard.
Once I established credit, I applied for one regular credit card and used it for a specific purpose (IE: Paying bills or filling my gas tank weekly). I'd then pay the card off as soon as the bill was published. Two key components to building credit are (1) on-time payments and (2) using your credit.
Hope this helps,
Late payments are the culprit. Make sure you pay on time AND in full. Credit card utilization (% spent of total limit) should be kept ideally under 10%.
My rule of thumb is never spend more than the money your checking account has at that time. Do not open multiple credit cards until you have no late payments for at least a year
Do not ask for credit report more than once a year.