How to Build Good Credit& Enjoy Peace of Mind
Worrying about money is arguably one of the most stressful aspects of modern life, with ongoing financial pressures being linked to migraines, heart disease, diabetes, and sleep problems. Not to mention the negative impact that it can have on your mental health.
A poor credit score is one that is less than 579. Currently, an estimated 12% of Americans have a credit score of less than 550.
Sadly, poor credit can result in you having to spend more on your mortgage, car insurance, credit cards, and many other crucial outgoings leading to even more financial issues and more stress.
However, before you give up and resign yourself to a lifetime of financial woes, check out the below credit-building tools and start improving your credit score today!
Take out a loan
You may think that borrowing more money will hinder, not help, your credit score. However, when done correctly, a personal loan can help to improve your credit score by positioning yourself as a responsible borrower as long as the loan is paid off on time and in full.
You need to make sure that you can afford the monthly repayments, are not borrowing more than you need, and that you have thoroughly read and understood the terms of your chosen loan agreement.
Get a secured credit card
Having no credit score is just as bad as having a poor one. In some cases, it can be even worse. Therefore, you must find ways to start building a good credit score as soon as possible.
A secured credit card is a great way to build a credit score from scratch, allowing you to prove your position as a responsible borrower. Use your credit card to pay for everyday essentials and always make sure that you make a payment either before or on the due date.
Practice good credit habits
There is no quick fix when it comes to building up your credit score, and you will need to practice good credit habits overtime to see any substantial results.
Ways you can show that you are creditworthy include:
- Never miss or be late for a payment
- Keep your credit usage below 30% on all cards
- Do not apply for multiple lines of credit at once
- Don’t close credit card accounts unless absolutely necessary
Even though it can be tempting to bury your head in the sand when it comes to money, this will not help you improve your financial situation. Instead, make sure you regularly check your credit rating and reports so that you can see where you have gone wrong in the past and ensure you can plan better for the future. Often, people do not even realize that they have a bad credit score, or they don’t realize how detrimental a particular error can be.
Ask your credit card supplier for an annual credit report or utilize a free credit checking service online.
Building good credit can seem like an uphill journey, and in some respects, it is. However, by committing to change and adopting the above practices, you will soon start to see the light at the end of the tunnel. Not only will your bank manager thank you for it, so will your mind, body, and soul.