Your credit score is everything. Yes, those three numbers can determine if you get a job, an apartment, can buy a home, or buy a car.
A high credit score can open a lot of doors. You can get credit cards with awesome rewards and a better interest rate on loans.
You want to make sure that your credit score is as high as possible. What do you do if your score is less than perfect? Read these tips to find out how you can build credit in 2019.
The place to start to build credit and increase your credit score starts with where you are now. You need to pull your credit report to find out where you stand now. Otherwise, you’ll have no idea where you can make improvements to your credit score.
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What you can do is go to AnnualCreditReport.com. This is the site that’s run by the three main credit reporting agencies: Experian, Equifax, and TransUnion. You are entitled to pull one credit report for no charge each year.
The credit report will show you your credit history, including open accounts, amounts owed, late payments, and closed accounts. You will have to pay a small fee to find out what your actual credit score is.
If you have a credit card, your provider may already have a program that lets you access your credit report and your credit score.
Once you have your credit score, it’s time to use it to build up your credit. Here are the top ways you can build credit in 2019.
The easiest place to start on your credit report is to fix any errors that appear. They may have wrong information, such as the name or address.
In extreme cases, you could have an issue of identity theft, where someone opened up credit card accounts in your name. They’d then shop away, leaving you with a huge bill and damaged credit.
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The Consumer Financial Protection Bureau has detailed instructions that walk you through the process of fixing errors on your credit report.
What do you do if you don’t have credit? You can open up a secured credit card to help you build up your credit score.
It’s also a great way to rebuild credit if you experienced a major hit in your credit score.
A secured credit card is a card that requires a deposit, usually between $250 and $500. Your credit limit is not going to be more than your deposit.
Once you put a deposit down, are then free to make charges to the card. You have to pay the balance off every month in order for it to have a positive impact on your credit. You also have to pay your bill on time.
If you have a good track record over 6 months or so, you can contact your bank to upgrade to a standard credit card. The bank will return your deposit to you.
A key to a good credit score is to pay your bills on time. Some creditors can be unforgiving and can report a payment that’s late by one day. They may even report you if you made the payment on time and it didn’t clear until after the due date.
You want to make sure that you make your payments on time. If you happen to be a day late, you can call your credit card company and ask for late payment forgiveness.
There are a number of factors that determine your credit score. The credit utilization rate can make up a sizable portion of your credit score.
Credit utilization is the ratio of how much credit you’re using vs. the amount of credit you have available. For example, if you have $20,000 in credit available and you are using $10,000 in credit, your utilization rate is 50%.
The closer you are to maxing out your credit, the lower your credit score will be. The easiest way to give your credit score a bump is to pay off your debts as soon as possible.
Ideally, you want your credit utilization rate to be 30% or lower. This sends a signal to credit reporting agencies that you have your finances and your credit under control.
Credit utilization is a big part of your credit score. You do have an option to lower your rate that doesn’t involve paying down your debt. You can ask for a credit increase.
A credit increase will give you more room because you’ll have more credit available to you.
Using the example from above, if you went from $20,000 in available credit to $25,000, your credit utilization rate would drop from 50% to 40%.
Credit reporting agencies recognize that it’s more difficult to build credit and maintain a good credit score.
They’re looking at alternatives to the traditional loans and credit cards on the credit report. Experian is offering people the opportunity to add utility bills and rent to your credit report. This can be a smart move as long as you pay these bills on time.
The best way to build credit in 2019 is to use the credit you have responsibly. That doesn’t mean that you should finance a vacation or impulse purchases with your card.
That will only get you in trouble. Instead, make sure your credit cards have a specific purpose. One might be for auto repair emergencies and another may be for fun purchases.
This will help you keep your spending organized and under control.
With more people relying on credit to make ends meet, it can be difficult to build credit in 2019 and increase your credit score.
Fortunately, there are things that you can do that will make a difference to your score. For starters, you need to know where you are right now by pulling your credit report.
You can then see where the best opportunities are, whether that’s fixing errors on your report or paying down your debts.
Do you want more credit tips? Check out this Credit Card FAQ to find out more about using credit cards.
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