What Are the Best Ways to Build Credit?

Your credit score is primarily based on a credit report information typically provided by credit bureaus.Though standards for rating credit scores vary from lender to lender, 700 and higher (on a scale of 300 to 850) is generally regarded as“good.”

 

Your FICO score, which is the most commonly used model, is based on the following components:

 

  1. Payment history – 35% of total credit score
  2. Credit utilization – 30% of total credit score
  3. Length of credit history – 15% of total credit score
  4. New credit accounts – 10% of total credit score
  5. Mix of credit accounts – 10% of total credit score

 

To discover the best ways to build credit, just turn to a reputable business funding provider to enjoy the right business financing opportunities that can help you build credit successfully. Respectable alternative online lenders are ready to work even with those merchants who have bad credit or no credit at all.

 

Tips to Help You Build Credit Easily

Below you can find the best steps that you can take while trying to build your credit:

 

  1. Apply for a Secured Credit Card

Apply online or turn to your local bank and make a deposit of $200-2.000. This is similar toa traditional credit card.

 

  1. Become an Authorized User of Someone Else’s Card

Consider becoming an authorized user of someone else’s credit card. If this person has good credit, you’ll start building good credit as an extension of his/her credit history.

 

  1. Use the Right Credit Card

Choose the right credit card bypaying attention toannual fees, interest rates, credit limits, billing cycles, rewards or cash backs, and cash advance fees.

 

  1. Don’t Allow Your Balance to Go High

Keep your balance-to-credit-limit ratio around 30% or less.

 

  1. Pay Off Your Balance in Full

Don’t fail to pay your balance in full every month and make on-time payments.

 

  1. Enable Auto Pay for All Your Bills

Log into your credit card account and enable auto pay for your household expenses,such as utility, internet and insurance bills, from your checking account.

 

  1. Use Only One Account

If you apply for multiple credit cards at once, you can make your credit score go down. Moreover, your account will look risky in the eyes of creditors.

 

  1. Don’t Close Your Accounts

Avoid opening multiple cards and then closing them when you’re not using them. If you close any of your unused accounts, your credit score will get lower.

 

  1. Don’t Use Free Offers That Come with Credit Card Applications

Avoid free gifts for applying for a credit card. Be aware canceled cards will appear on your credit report.

 

  1. Get a Co-Signor

Consider using a co-signer. The co-signer will be responsible for the full amount owed if you don’t pay.

 

  1. Get Credit for the Rent You Pay

Some rent-reporting services take a bill you’re already paying and put it on your credit report, thus helping you build a positive history of on-time payments.

 

There are ways that can help you build your credit score and avoid unnecessary debt. Follow the best practices to start building good credit successfully.

 

Author Bio: Business Funding expert, Nathan Hale, founded First American Merchant with his eyes set on helping the backbone of our country, small business owners. His passions include writing/producing music, and travel. First American Merchant is America’s Best company offering the best ways to build credit, and serving both traditional and high-risk Businesses.

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