Your credit score is a three-digit number that’s meant to be a snapshot of how well you handle your credit and finances. It can go up or down, depending on how often you pay your bills on time, how much debt you have, and other details. It’s an important factor when applying for things like personal loans, credit cards, leases, mortgages, and even some jobs.
The higher your score, the less of a risk you’re considered, and the more likely you are to get financing at good interest rates. A good credit score can open up many opportunities and save you thousands of dollars in the long run.
However, if you’ve just graduated college, or recently had some financial difficulties, your credit score may not be in ideal shape. Luckily, there are a number of easy ways you can start building good credit.
1. Pay Your Bills On Time
A very simple way to start improving your credit is to get your name on some bills and pay them on time. If it helps, you can set up a bill payment system with your bank to pay some bills (like utilities) automatically each month. The more consistently you pay your bills promptly, the better your credit will become over time.
2. Apply for a Personal Loan Instead of a Credit Card
Your credit card applications are taken into consideration as part of your credit rating, and can potentially hurt your credit. On the other, applying for a personal loan and checking your rate with LendingUSA will not affect your score. Plus, LendingUSA’s fast decisions and competitive rates can often make it a better alternative to credit cards when it comes to financing a large purchase.
3. Hold On to Your Accounts
If you have open bank accounts or active credit cards that you are considering closing, hold onto them. Closing down accounts will temporarily lower your credit rating, and in many cases, having long-term accounts makes you seem like less of a risk to lenders. Even if you don’t use a credit card that you’ve had for years, holding onto it may be the best way to maintain a good credit score.
4. Pay Down Your Debts
Paying off any outstanding debt you have in a timely manner can be a great way to improve your credit. However, you should always check to see if there is a pre-payment penalty. Paying too much, too early can sometimes end up costing you! Luckily, this is not always the case – personal loans with LendingUSA have no prepayment penalty, so you can pay off your loan at the time that works best for you.
5. Have an Emergency Plan for Your Finances
If you make less income or have more expenses than you expected one month, you may have a hard time paying your bills, which can potentially hurt your credit score. This is why it’s important to have a plan in place. Starting an emergency fund and adding to it each month is a good way to prepare.
However, if you lack the funds and need money fast, you can also fill out an application for a personal loan from LendingUSA. Filling out the application generally takes just 90 seconds or less, and once you complete your loan documents and we verify your identity, you will receive funding in only 1-3 business days.
Building a high credit score can seem intimidating, at first – but by planning ahead and using smart spending habits, you’ll be able to raise your rating in no time!