With the economy beginning to repair itself, the financial situation of many Americans is also turning around. If you are one of the people who didn’t have credit established before the economic downturn, now is a great time to get started on establishing your history. Following are four ways in which you can easily set yourself up to have a good credit report score in just a matter of months. Credit reports can be downloaded for free and should be checked regularly to see how well you are progressing on a high score.
Open a Checking and Savings Account
Take what cash you have and open an account at the nearest bank or credit union. A checking account is the first priority while a savings account is second. Keep a balance in the checking account and don’t ever write checks or use a debit card on that account for more than what you have placed in it. Banks keep track of every time a payment bounces and they have to cover or decline the transaction. If a transaction is not covered by your balance, the average fee is $35 for insufficient funds, which can add up quickly.
Apply for a Small Credit Card
To establish a credit score it seems silly that you have to take out a credit card in order to do so. However, having a credit amount on a card will show you are responsible by not charging it up and when you do have a balance, a payment is made regularly and on time. When choosing credit cards to apply for, pick one that has a low APR rate, of less than 10% if possible. The average interest rate is 18%, but many credit cards charge 25% or 29% on the balance. There are some companies who offer deals to people who are new to their company and for those who need to establish good credit.
Pay Every Bill On Time
Missing a $50 student loan payment might seem insignificant in the grand scheme of things, but when a lender is considering giving you hundreds of thousands of dollars for a home or business loan, it suddenly becomes very important. With the state of the real estate industry, currently getting a mortgage without a 20 percent down payment is nearly impossible to do unless you have almost perfect credit. That one missed payment? It could lead you to the almost 25 percent of people who are turned down for a mortgage the first time they apply for one.
Do Not Max Out Credit
Having credit available on a credit card does not give you free reign to go on a shopping spree. The credit should be saved in the case of an emergency, such as a vehicle repair or a medical bill. Lenders look to see how much credit you do have when they are determining eligibility for a loan amount. Not surprisingly, the more room you have on a credit card, the better your chances are for getting a loan.