Let’s face it. Credit is very important. You need a good credit rating in order to take out a home loan or car loan in the future. It is important that you start as early as possible in building a good credit rating that will enable you to get important loans down the road. It takes time to achieve a good credit history but it is the very thing you need to prove to lenders that you are reliable and trustworthy when it comes to your finances. Some people who do not have a credit history often also get turned down when applying for loans because they have not yet established themselves in the world of credits. Credit companies need to see before hand that you are not a big risk. The only way to prove this is through a good credit rating.
How to Build Your Credit History
Take out credit cards and store cards
The use of credit cards and store cards will help you start a credit history. Generally, store cards are easier to get but if you are able to get approved for a credit card as well, that’s good. Use these cards and pay them off on a regular basis. Make sure that your payments are on time because one late payment could put a slight mark on your rating.
Take out a small loan with a co-signer
You can ask your family or close friend to co-sign a small loan with you. This loan will be registered under your name so it will show up on your credit report. Once you pay off a small loan, you can eventually get a bigger one without a co-signer so keep a good payment record on this as well.
Update your personal information with the credit agencies
Sometimes, the slightest error on your address or phone number could lead to turned down loan applications. The bad thing is, you don’t only get denied of the funds, a declined application will also show on your report making it affect you even more. Make sure that everything on record about you with the credit agencies are up to date to avoid this problem.
Take out a payday loan
Payday loans are good supplements to your paycheck until the next payday. It’s not only a way of getting fast cash but it could also help you build your credit. When you take out a short-term loan and pay it off on time, it will show that you are reliable and responsible. Every now and then, take advantage of payday loans but make sure that you it off completely when the next paycheck comes because this is a very high interest yielding loan that you wouldn’t want to keep in your debt portfolio.
Building a credit history may take some time but as long as you ensure you are on top of your finances, it wouldn’t be too much of a trouble. Once you have established your good credit rating, always keep track of it so that you can immediately see any red flags that could affect you in the long run.