Having good credit is vital to getting the best interest rates on loans but it is also important for many other aspects of your life. Building a good and maintaining a solid credit history may help with your employment options, impact your insurance rates, and as well as possibly determining how much of a deposit you will be required to pay when renting from a landlord. While it can pay to have a good credit rating, it does not mean that you should have to go into debt to establish a good credit rating.
A friend recently told me a story about their recent car buying experience. This car buying friend had not ever checked her credit score as she didn’t have any need to do so. She told me her score, which was in the high 800s and my jaw dropped. It was one of the highest credit scores this dealership had come across in a long time.
If you don’t have credit or much credit, the key to building good credit is to start small. One credit card or small loan can get the ball rolling. You can also find many online resources to help you become more financially literate on the Discover website.
Here are a few tips to help you establish good credit:
- Pay on time. This is one of the most important steps in building and maintaining a solid credit history. If you pay late, it may damage your credit history, and lower your credit score.
- Pay off your any charge cards in full at the end of the month. When you get a card, always pay off the balance in full when the statement arrives. Paying off your balance in full shows the card company that you are fiscally responsible.
- Keep total charges within credit limits. Keep your total monthly charges well within your credit limit because when calculating your credit score, you will take a hit if your balance is above the limit as this is a signal to creditors that you may be having financial difficulties. Discover provides FICO credit scores on all cardmember statements, which is very helpful to keep track of your credit score over time.
- Regularly read your credit report. It may not be the most fun reading material, but negative information can damage your credit history and your credit score. Make sure your information is current and accurate to ensure no clerical errors keep you from getting credit or best available terms on loans.
- Understand debit cards. Debit cards look like credit cards but they actually function more like a checkbook or cash. They provide direct access to the cash in your bank account. What debit cards don’t do is help you build your credit history because you are not using credit to buy those items.
Keep your eyes on your goals by establishing and maintaining a good credit history and you will be able to save money when you need to borrow money in the future.
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My views are my own and do not necessarily reflect the views of Discover Products Inc. and its affiliates. This post was sponsored by Discover Card. Rest assured, this Post was written by me and was not edited by the sponsor. Read more on my Disclosure Policy.