Everyone starts from zero with credit scores and should pay attention to their credit, even when new to work and personal finances. Your credit score is based on information from major credit reporting bureaus, which aren’t created until you’ve had credit in the form of revolving credit (credit cards) or loans. Most people won’t have a credit score before 18 years of age, here are some helpful insights on how to build your credit score.
Starting credit scores are calculated on several factors. Your payment history, your debt load, and your credit mix (do you have all loans or all credit cards or some of each) all go into your credit score, among other things. While you may know how to get credit, you should also know how to avoid damaging your credit score.
Things That Can Harm Your Credit Score
You should consider things that can harm your credit score. To safeguard your credit record, try to avoid or minimize the following:
- Late payments can result in a lower credit score, and they can stay on your credit report for years.
- A lot of credit applications at the same time – only applying for the credit you need as you need it is a good idea.
- Maxing out your credit – this is looked upon unfavorably by lenders and creditors. They like to see a debt-to-credit ratio below 30 percent.
How to Avoid Hurting Your Credit Score
Financial experts advise managing your credit carefully to avoid hurting your credit score. Use it sparingly or only for special purchases. Only use credit that you can pay back in a reasonable amount of time. Make more than the minimum payment, doubling it if possible.
You should check your credit reports from major credit reporting bureaus every year, or even every six months if you can. Review them for inaccuracies and get errors fixed as soon as possible. Reviewing your credit reports lets you understand your creditors, correct any errors, and alert you to any identity theft.
How to Improve Your Credit Score
If you have a problem with your credit score, there are things you can do to improve it. If you have a problem making payments on time, consider doing something to increase your income to get back on track, such as a part-time job or a small personal loan. Installment loans with no credit check can help you get caught up without impacting your scores.
If you can’t afford to make double the minimum payment, you should pay more than the minimum payment every month. It’s even better if you pay your balance every month to avoid incurring interest charges. If you need an installment loan in Arizona, you may want to apply for a personal loan with Tio Rico te Ayuda.