Having good credit is much like having a good reputation – it can open doors for you because you’re seen as trustworthy and reliable. Lenders make use of your credit score to help them decide if you can act responsibly with a credit card or with a loan.
If you are new to the world of credit, we look at how long it takes to actually build up good credit from scratch.
Get a credit card
If you’re just starting out with building your credit from scratch, a move in the right direction is to look at applying for a secured credit card. There are literally thousands of credit cards available, many of which are out of your reach if you have bad credit or no credit at all. Secured credit cards offer you the best chance at qualifying for credit.
You just have to bear in mind that secured credit cards will require a cash deposit. Whatever amount of money you deposit then becomes your credit limit. Another useful credit card to apply for is a store credit card. These cards can provide you with the opportunity to handle just this one card responsibly and to build up some good credit.
A partner in credit-building
Being rejected for rental accommodation, for a personal loan or car loan can be soul-destroying. Mercifully, Kikoff can be your lifeline. They let users show their creditworthiness without the need for a credit card, credit score or bank account. With them, you can build credit for free as they have all the know-how and years of financial technology experience.
They want to help you build credit by establishing a good payment history. Not everyone has family and friends to help with getting a loan and then one of the best ways to build a credit history is to look for a credit builder loan to establish credit.
They are usually for a smaller amount than other types of loans and the credit builder loan from Kikoff is a zero-interest credit builder that allows you to start building credit completely free.
Make frequent payments
If you’re a freelancer, you’re lucky in terms of building up good credit quickly. Being paid by different clients throughout the month gives you the chance to make small payments that keep your credit card balance down. Making frequent payments throughout the month is what is known as credit utilization, which has a good effect on scores. Keeping your utilization low will work at benefiting your score right away.
Interest accrues according to your average daily balance during the billing period and if you carry a credit card account balance month to month, frequent payments can reduce your interest charges. The lower you keep the balance, the less interest you pay.
Pay on time
If you do get yourself a credit card, remember to pay your bills on time. The reason this is so important is that your payment history is 35% of your FICO score.
Whether you’re new to the world of credit and building up from scratch or trying to re-enter the credit world after a bad patch, building your credit score from the bottom is going to take some time.
Building credit is not an overnight thing. There are things you can do to hasten the process. It is quite possible to build good credit in just a few years, but it’s about being meticulous about making timely payments.
If you were to do thorough research, you will find that those consumers with high credit scores in the top 10th percentile, which is 800 or more, have spent several years building up their credit history.