Today, people in the US had an average credit score of 716 – a good credit score average for most. Having good credit means you’ll often get approved for loans and credit with better interest rates and fewer fees.
Having bad credit, on the other hand, can significantly impact your future financial decisions and opportunities. You may develop recurring debt or unpaid loans if you don’t know how to establish good credit. So what can you do to improve your chances of getting approved for credit before it’s too late?
Check out these tips below for how to establish good credit and take control of your finances today.
1. Get a Secure Card
If you’re new to credit or are trying to improve your credit score, a secured credit card is a good option. A secured credit card is a credit card backed by a security deposit. The deposit secures the credit line on the card, and if you default on the payments, the issuer can use the deposit to cover the loss.
To get a secured credit card, you must provide the issuer with a security deposit, usually equal to the credit limit. When using a secured credit card, make all your payments on time and keep your balance below the credit limit to avoid fees and help improve your credit score. Creditors like to see that you can manage your credit well and that you don’t max out your credit cards.
Using a cosigner with good credit can help you get a loan or credit card if you’re building credit or have no credit. The cosigner is responsible for the debt if you default, so make sure you can afford the payments before you cosign. You can improve your credit by paying on time and keeping your balances low.
2. Become an Authorized User
You can establish a good credit score by becoming an authorized user on someone else’s credit card account. It means that you will be able to use their credit card, and their good credit history will become part of your credit history. It can help you build credit without having to open your account.
To become an authorized user, you must have the primary cardholder add you to their account. Once added, you can use the credit card like any other cardholder.
3. Check Your Credit Scores and Reports
Ensure you update your credit score and reports to identify potential problems early on. You can consult a financial adviser to help you with credit problems. If you have questions like “is 500 a good credit“, they can give you all the information you need.
Furthermore, avoid creating too many new credit accounts simultaneously. Opening a bunch of new accounts in a short period can look like you’re trying to borrow too much money and can negatively impact your score.
Learn How to Establish Good Credit Scores With A Professional
Make sure you consistently pay your bills on time and don’t carry a monthly balance on your credit cards – pay off the entire balance each month. If you’re trying to learn how to establish good credit, a professional can help. A professional can provide guidance and resources to help you navigate the credit world.
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