• How to Build a Good Credit Score When You are Just Starting Out

    Developing good credit is something of a conflicting situation. With no credit card, it's difficult to build a good credit history. However, with no credit history, you'll find it hard to get a credit card. This leaves many people wondering how they're supposed to start building a good credit score when nobody wants to give them a credit card. Luckily, it's not very difficult once you know what to do.

    Obtaining a Credit Card

    The first step is always the hardest, and getting a credit card is no different. Keep in mind that as someone with no credit history, your options will be pretty limited and you'll have to do some research to find the cards available to you. Your best option is to seek a secured credit card, which may be available from many banks such as Primeway Federal Credit Union. These cards come with a very low credit limit but present no risk to you. Once you've been approved for the card, you'll have to pay a deposit that can span a few hundred dollars. Should you choose to close the account eventually, you get your deposit back. Secured credit basically means that you're lending yourself money as opposed to getting it from a lender.

    Pay Bills on Time

    Keep in mind that 35 percent of your score is determined by your payment history. Of course, this means that you'll want to focus on paying all of your bills, even your utilities, on time and in full. Furthermore, more recent payments will have the greatest impact on your overall credit score.

    Avoid Too Much Debt

    It's a popular misconception that all debt is good debt, but this can get you into trouble. Around one-third of your score is determined by how much debt you have, but having too high a debt to credit limit ratio can hit your score where it hurts. Generally, you should try to keep your debt within 30 percent of your total limit. It's okay to use your credit card on a regular basis, but remember that it's not free money. Avoid using it for things you can't afford.

    Don't Be Hasty

    Credit companies like customers who have long-standing accounts and typically view them as more trustworthy. Once you open a credit card account, avoid closing it unless absolutely necessary. The better the average age of your account is, the higher your credit limit will become.

    Building and maintaining good credit is a finely-tuned balancing act. However, with a little responsibility and careful planning, you can raise your credit score to a respectable level and make it easier to obtain other lines of credit in the future.

    Do you have have any questions or suggestions? Write in comment section.

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