Building and establishing good credit will help you, not only with the home lending process, but many other aspects of life, like buying a car or getting a good insurance rate. That’s why it’s so important to make credit your life-long friend. The world of credit can be tricky to navigate, whether you’re just starting out or been in the game for a while. Here are a few quick tips for building better credit today.
- Pay Your Bills On Time. Payment history accounts for 35% of your credit score, so it is vital that you make your payments on time to maintain your score. If you make a payment late, it can have a negative effect. If it’s difficult for you to remember to pay on time, it’s a great idea to set up automatic payments to your credit accounts so you never miss a single due date.
- Keep Credit Card Balances Low. Your debt ratio of an outstanding balance to available credit is important. The average amount of credit utilization is around 30% of your available credit. If you are having trouble paying off the card, get real about your finances. Create a budget and spending plan with the goal of paying off your cards in mind.
- Pay More than the Minimum Payment. If possible, pay the full balance due on your credit card each month. If you can’t afford the full statement, pay as much as you can that month. This will help you avoid paying interest and other fees and help you avoid maxing out your credit cards.
- Practice Patience. Improving your score won’t happen overnight. It is important to implement these habits now to ensure a healthy growth of your scores over time.