How to Start Building Credit
Building and maintaining good credit is essential if you plan to apply for a car loan or home loan someday. Having good credit will make it easier to get approved for a loan with better rates and terms. If you want to make sure your credit is up to par when the time comes, follow these tips to help you start building credit.
Check Your Credit Report
The first step to getting your credit up to par is knowing where your credit stands. Start by requesting a copy of your full credit report and review it carefully to make sure your information is correct. You are entitled to one free credit report every year from AnnualCreditReport.com. If you notice any errors on your report, contact the credit bureaus to have them removed or corrected. Knowledge is power, so it’s important to know where you stand. You can use an app or service that tracks your credit score, or eligible members are able to view their FICO® Score for free within Digital Banking. Log in now to check your score. Remember, checking your credit score won’t lower it. Getting a clean bill of credit health is the first stepping stone to start building your credit.
Apply for New Credit
To establish more credit, you can apply for a new credit card or take out a small loan or line of credit. Follow best credit practices by making small charges, keeping your balance low, and always making your payments on time. Regularly using your card will help you build up more credit over time, and you could even earn rewards if your credit card has a rewards program. Our Visa® Platinum Rewards Credit Card is a great card to help you build credit and earn rewards while you do it. But don’t open up multiple new credit accounts too close together, as this looks like risky behavior to credit lenders. Opening too many accounts at once can make it more difficult for you to get approved or get the best terms the next time you apply for a loan like a mortgage or car loan.
Make Small Charges
Once your credit is established, make small charges on the card and keep your balances low. Avoid large purchases or getting too close to your credit limit. Your total amount owed to credit lenders is a key factor in determining your credit score, so you want to keep that amount as low as possible. If you get too close to maxing out your accounts, lenders may think you’re more likely to get behind on payments. The suggested rule of thumb is to keep your credit usage below 30% of your available credit. This is known as your credit utilization ratio. To keep your utilization low, make small charges you know you will be able to pay back on time. If you aren’t able to pay your bill in full each month, pay as much as you can afford so you avoid overpaying in interest charges.
Pay Bills on Time
Your payment history is the most influential factor in calculating your credit score, so building a history of on-time payments will help you build up your score. Make sure all of your utility and all other bills are in your name, and pay them on time each month. Late and missed payments will damage your score, so even if you can’t afford to pay your credit bill in full, pay at least your minimum payment amount to avoid hurting your credit score. If you find it difficult to pay your bills on time each month, set up payment reminders and automatic bill payments. You can set up Bill Pay through your Robins Financial account within Digital Banking to automate your payments so you never miss another due date.
At Robins Financial, we’re committed to helping our members build good credit and keep it there. We make sure our credit cards work for you, which is why we offer the lowest rates possible, low to no fees, great perks through the Scorecard® Rewards Program, and convenient payment options to make sure you never miss a payment. Plus, eligible members can view their FICO® Score for free within Digital Banking so you can always stay on top of your score. Log in to Digital Banking today to check your FICO® Score.
Start building your credit today! View our rates and credit card agreement for more information, or apply online now or over the phone.