Since working at a credit union since the age of eighteen, I was introduced to financial literacy. While working there I learned skills and knowledge that allowed me to make informed and effective decisions. Not only did I learn how to do this for myself, I also did it to help other people who came to the office with specific questions. People used to constantly ask me how they can build their credit. I thought it would be a good idea to show everyone how I built mine. In the process of building some credit history, I followed these steps:
1. Saved up money
I saved up as much money as I could because part of me knew that I’d need to apply for a secured visa. I had no prior credit history to be approved for a store or rewards credit card.
2. Applied for a secured visa
Secured credit cards are a good way to build credit because applicants don’t need a credit history. The only thing they need is a certain amount of saved up money (determined by the financial institution) to use as collateral.
3. 30% Utilization ratio
I strictly followed the 30% utilization ratio. I didn’t want to seem “desperate” in the eyes of the lender so I was careful on how much I used the secured visa.
4. Paid on time
Making payments on time helped me build a good credit history. I tried my best to avoid late payments since it is very harmful for the FICO score.
Patience was definitely one of the main things I needed when I was looking to build my credit score. It took about seven months to actually see all the habits mentioned above pay off.
These five steps are a general idea of what I did to build my credit. I am no expert, and I based this article off of my own experience. The actions mentioned above are exactly what worked for me. I wanted to build my credit since the age of eighteen because it would give me the opportunity to qualify for a car loan and mortgage in the future. I hope the information listed in this article is of value to other individuals as well.
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