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A Beginner’s Guide to Building Credit

Building your credit requires discipline and sticking to a plan

Creating a credit from the start is such a hectic task. Not many financial institutions can trust you without a credit history. Here is some of the critical information to know about building credit.

How to Build Credit with a Credit Card 

A Credit card is one of the most used means of building credit for beginners. Use your credit card regularly and making repayments on time. The more you use your credit card and repay on time, the higher your financial discipline hence the possibility of good credit. 

You have to understand though that you won’t qualify for some of the major credit cards in the earlier stages. As a start, consider the different cards offered by the stores. These cards work similarly to a credit card. To help you land the best credit cards to build credit, consider store cards that work with the credit bureaus. 

How to Build a Credit without a Credit Card

Building your credit depends on your ability to manage loans. For most credit cards provide the easiest ways to get loans. For others, though, credit cards are not their best option. If you don’t fancy a credit card, you still have several avenues of getting and managing a loan. 

The first step towards creating the credit is by paying all your bills on time. While in most cases, the regular bills like rent, water and electricity don’t affect your credit, reporting them allows for consideration. Paying off your college loan also helps in building your credit. The other options include seeking for any regular loans like a mortgage or car loans and repaying on time.

How Credit Score affects you 

As long as you will be looking for financial support, then your credit score must play a role. No financial institution can trust you with their money if you have poor credit records. Other than the big financial institutions, other lending facilities like care lending also look into your financial records. Even though it is not a requirement for most jobs, working in the financial sector and dealing with sensitive information requires a stellar credit record. 

Mistakes that Impacts Your Credit Score 

Building your credit requires discipline and sticking to a plan. Any error that affects your credit can stay on your records for as long as seven years. You must, therefore, avoid making such mistakes at costs. One of the main mistakes first-time credit card holders commit is taking credit that you cannot afford. Before you take in more debts, understand how you will repay them. Failure to repay or late repayments have adverse effects on your credit score.

Credit Card, Withdrawals, Calculation, Bank, Card, Don
The more you use your credit card and repay on time, the higher your financial discipline hence the possibility of good credit. Pixabay

Credit card churning is another mistake that beginners are prone to. While taking up different credit cards due to the sign-up bonuses and rewards, servicing them, later on, can be quite hectic. Lastly, failure to protect from credit card fraud makes one susceptible to criminal activities using their details, thus damaging their financial reputation.  

ALSO READ: Current Pandemic Set to Hit Financial Performance in Q1 2020: Twitter

Bottom Line 

A sound credit card is not a gift that anyone hands to you. You need a deliberate plan to grow the credit, with or without a credit card. The more responsible you are at managing your finances, the better your credit score. 

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