The Best Ways to Build Credit

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A great credit score opens a lot of doors. In order to get to that point, you need to focus on building a positive credit history. There are several ways to achieve this, and a few of the very best tips are outlined below.

Sign Up for a Secured Credit Card

When you are totally new to the credit game, qualifying for an unsecured credit card is pretty much impossible. Even if you do qualify, you will probably have to deal with high interest rates and less-than-great terms. To get around this while still building your credit, you should sign up for a secured credit card. Your credit limit is based solely on how much money you deposit into your account. Every time you use your card, the information is reported to the major credit bureaus. Over time, you can establish a positive credit history that will give you exciting new opportunities down the road.

Designating your secured credit card for specific things like fuel or groceries makes it easier to budget your money.

Get a Co-Signer

Another great way to build credit is by getting a car loan or another type of loan with the help of a co-signer. Instead of basing their decision solely on your credit information, the lending institution takes the co-signer's financial history into account too. In this way, you can ride the coattails of your co-signer and reap the rewards of making on-time payments on your loan.

Get a Credit Card and Use it Wisely

After a while, you will begin receiving credit card offers in the mail. Be selective about the card or cards that you use. Pay close attention to things like interest rates, annual fees and penalties. Once you receive your credit card, use it wisely by keeping the following points in mind:

Pay off your credit card balance in full every month.

Always make your monthly payment on time; a single late payment can cause serious damage to your credit score.

Keep your balance at or below 30% of your total credit line, which tends to produce a stronger credit rating.

Use your credit card sparingly.

Stay Informed about Your Credit Report

Finally, you need to stay informed about your credit report in order to build and maintain credit. Take advantage of the free annual credit reports to which you are entitled; they can be found at www.annualcreditreport.com. Check your reports regularly; if errors come up, you can have them corrected in a timely manner.

A single late payment can cause serious damage to your credit score