In order to start building your credit score, you have to understand how your score is calculated and what things creditors look for in your financial history to determine that number.
What is a credit score?
A simple yet crucial question to understand: Your credit score is a three digit number that is designed to predict the possibility that you won't pay your bills. Whether you're trying to get a loan for a home or tuition, lenders can charge you higher interest rates if they see you probably won't be on time or pay your loan back at all.
This number is between 350 and 850 and is based on your borrower's bill-paying history, debt profile and statistical information that determines credit behavior. Intricate stuff, but now you just need to know what you can do to improve it. Once you've gotten the break you needed through credit repair, it's time to maintain your higher score and build upon it.
- Concentrate most about paying all credit related bills ON TIME first.
- Set up auto-payments for at least the minimum payment and then pay more when you are able to.
- Treat your credit as a privilege and not as a right.
- Keep a budget, and don't use credit for things you are not able to afford.
- Make sure you always have credit available because when you need it, it's hard to get, but when you don't need it, it's really easy to get.
- Keep your old credit accounts open and check your report on a monthly basis.
- Know what is on your report.