Having a good credit history is incredibly important to your financial life. This is because the better the credit history you have, the lower interest rate you can get on your loans. This will save you a lot of money in long run, especially on mortgages.
But in addition to a better interest rate, having a good credit history can help you get a job and a lower insurance premium. This is because some employers and insurance companies use your credit history to offer you a job and set your insurance premiums. The better your credit history is, the better chances of landing a job and having the lowest premium possible.
3 Easy Tips To Establish Good Credit History
#1. Use Time To Your Advantage
The number one factor in establishing good credit history is having a long credit history. Unfortunately, there isn’t much you can do about this. You just have to keep credit accounts for a long time. As the years pass, you will see your credit score improve.
This is because as you have more credit history years, creditors have a better understanding of how much of a credit risk you are. This makes sense when you think about it.
When you first meet someone, you don’t know much about them and might not fully trust them. But as you get to know them over time and understand who they are as a person, you are better able to gauge if you can trust them or not.
#2. Pay On Time, All The Time
The next biggest factor in good credit history is to pay on time. No matter what you do, you always have to pay your bills on time. Even if you can only pay the minimum in a given month, pay that amount. This is critically important.
Think back to college or high school when figuring out your grade for a class. Your overall grade is affected more negatively by a zero or incomplete than it is with a 25% on an exam. The same idea applies to paying your bills on time. By paying the minimum, you at least show you are paying on time. The amount isn’t important.
One more point here. If you have been paying on time and miss a payment, don’t just sit back and let that one late payment have a negative impact on your credit history. Call up the company and explain what happened and then ask if they can waive the late fee.
In most cases, they will waive the late fee and record your payment as being on time.
#3. Stay On Top Of Things
So you are paying your bills on time and being patient as time works in your favor for improving your credit history. But there is one more thing you can do to ensure you credit remains good. You need to keep on top of things.
This means you need to regularly check your credit reports. Luckily the government offers you a free credit report once a year. But you can use this trick to get your free credit report 3 times a year!
Why do you want to keep checking your credit report? With the rapid increase in identity theft, it is critical to make sure you don’t become a victim. And if you do become a victim, the sooner you catch it and start working to correct it, the easier it will be.
Overall, doing your part to having a good credit history will only offer positives in your life, both financially and personally. So be sure you take the time to keep your credit score high and keep on top of your credit.
Improving your credit score is basically like fixing errors in your financial history. To do so, start by making payments on time, pay more than the minimum amount and reduce the amount of debt you owe. Remember, it takes patience and discipline to restore your credit score. If you need credit now, there are credit cards for people with no credit or bad credit.
It only takes one negative to ding your credit, but the good news is that most everything is in your control. By following these tips, you ensure you have the best credit history possible.