Building a credit score is financially important, because it allows banks and credit unions to grasp a better understanding of how much they can trust you with debt. Having a high credit score makes it easier to get a loan and raises your chances for low interest rates. Check out these tips to learn how to build your credit.
Get a Credit Card
It only makes sense that building a credit score involves a credit card. A credit card allows you to rack up debt until you hit the cards maximum credit limit (do not max out your card, see tips below). A smart way to slowly build credit is to buy something you can afford, but charge it to your credit card. Once the transaction has processed, pay off the debt you acquired as soon as possible. This will slowly but surely build your credit score.
Take Out a Loan
A loan and a credit card essentially work the same. A loan pays for something you can’t afford in full. You then pay off the debt in affordable chunks, usually with interest. Every on-time payment you make will help raise your credit score.
Side Tips for Building a Credit Score
Use some of these tips to help build your credit. They include, but are not limited to:
- ALLWAYS PAY BILLS ON TIME: Not paying bills will damage credit scores.
- Pay as Much as You Can: Don’t pay the minimum monthly amount on large loans. Put as much money towards it as you can. This makes your overall interest payment smaller.
- Never Max Out Your Credit Card: Just because your card has a maximum limit, doesn’t mean you should hit it. The interest rates on credit cards become massive payments.
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Start Building Your Credit with MNFCU
Sign-up for a credit card or take out a loan with your friends at Metro North Federal Credit Union. Our Mastercards have zero transfer fees, so you can switch over without penalty! Our loan officers are knowledgeable and quick, so loans are a stress-free experience! Visit one of our local branches to learn more.