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  • Writer's pictureThe Consumer Protection Firm

How to Build Good Credit

Having good credit can positively impact your ability to obtain loans, credit cards, secure favorable interest rates, and even affect rental or employment opportunities.

Hand holding a credit card.

Here are a few steps you can take to build and maintain good credit:

Establish Credit History If you're starting from scratch, it's important to establish a credit history. Begin by opening a basic credit account, such as a secured credit card or a credit builder loan. These types of accounts are designed for individuals with limited or no credit history and can help you start building a positive track record. Pay Bills on Time It's crucial that you consistently pay your bills on time. Late payments can significantly impact your credit score and remain on your credit report for several years. Set up payment reminders, automate payments, or create a budget to ensure that you meet all your financial obligations promptly. Keep Credit Utilization Low Credit utilization refers to the percentage of your available credit that you use. Aim to keep your credit utilization below 30% of your total credit limit. For example, if you have a credit card with a $1,000 limit, try to keep your outstanding balance below $300. High credit utilization can negatively affect your credit score, so it's important to manage your credit wisely. Maintain a Mix of Credit Accounts Having a mix of different types of credit accounts, such as credit cards, loans, or a mortgage, can demonstrate your ability to handle different financial responsibilities. However, it's essential to use credit responsibly and avoid taking on excessive debt. Only borrow what you can afford to repay.

Limit New Credit Applications Each time you apply for new credit, it triggers a hard inquiry on your credit report, which can temporarily lower your credit score. Therefore, it's best to limit the number of credit applications you make, especially within a short period. Be selective about the credit accounts you apply for and choose those that align with your financial goals. Regularly Monitor Your Credit Report Reviewing your credit report regularly allows you to identify any errors or discrepancies that may be negatively impacting your credit score. You are entitled to one free credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) annually at Take advantage of this opportunity to ensure the accuracy of the information and address any issues promptly. You can also use a free monitoring service through certain credit cards or other programs such to look at daily changes to your credit score. Be Patient and Consistent Building good credit takes time. It's important to be patient and consistent with your financial habits. Make timely payments, keep your credit utilization low, and maintain responsible credit behavior. Over time, your credit history will improve, and you will see the positive effects on your credit score. Remember, building good credit requires responsible financial habits, consistent payment behavior, and careful management of your credit accounts. By being committed long-term and staying proactive, you can establish and maintain a solid credit foundation that will serve you well in the future.


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