Discover What Benefits a Good Credit History Can Give You
Having good credit can open a world of benefits for you. These benefits can allow you to pay the lowest interest rates and receive some of the best rewards. However, one must take the slow path to achieve this good credit history. With a history of on-time payments and responsible use of credit one can easily build good credit. Follow a favorable path and avoid the road bumps to receive the benefits you want.
Knowledge is power
Before rushing out to apply for credit cards, take some time to learn how it works. There are three major credit bureaus such as TransUnion, Experian, and Equifax calculating three different credit scores for you. A credit score is based between 300 and 850. This scores on the lower end of the spectrum are a high credit risk which leads to many denials in applications. The higher the credit score the better to receive the lowest rates and higher limits.
Your score is determined by your payment history, the amounts you owe, the percent of new credit you have, the length of your credit history, and the types of credit you have used.
It is wise when building a good credit history to keep a close watch on your credit score and fix any inaccuracies you come across. You want your credit history to reflect the positive information on these reports. Most credit reports contain 80% inaccurate information. That is a large percentage damaging your otherwise good credit history.
Don’t allow your credit to be pulled often. Applying for credit cards and loans will pull your credit score down. Don’t believe the myths of free credit scores either. The advertisements for these websites are only providing educational scores. You can obtain your real credit score for a small fee on the Experian website. This will allow you to view all three credit bureaus. You can also obtain a free copy of your report once every 12 months.
Use Credit Responsibly
It is important to use credit wisely when building a good credit history. At least 30% of your calculated credit score is based on how much available credit you have in use. So if your credit card has given you a limit of $1000, stay below the limit. Only use about $300 or less. By using under a third of your limit you are increasing your chances of achieving better credit.
Make sure that half of your credit is not being utilized on only one card. Apply for an additional card or raise your current credit limit to avoid this mistake. If you have a long history of on-time payments, then a higher limit should be easy to access.
These steps can easily lead you to the path of obtaining a good credit history. With good credit on your side, a world of benefits will begin to open to you financially.