Bottomline in the U.S.: You can’t do jack personally without credit, especially a good credit score. Without a decent credit history when it comes to a mortgage, auto loan, or renting an apartment — fuhgeddaboudit !!!
Take Charge America, a national nonprofit credit counseling and debt management agency, notes even with a low score, there are hard and fast rules for improving your credit, but many of them aren’t obvious and some even seem counterintuitive.
Here are some commonsense tips:
1. Establish a History: In most cases, paying with cash is the gold standard, but you establish good credit by borrowing money – and making regular, on-time payments to pay it back.
2. Diversify Your Credit: A consumer with an auto loan, mortgage and credit card who makes on-time payments will build a better score than someone with loads of one form of debt.
3. Be Choosy: Some small lenders and even a few large lenders do not report to credit bureaus. When taking out a loan, be sure to choose a lender that does report to the bureaus to ensure your score will improve with on-time payments.
4. Use Autopay: In a world of near-constant emails, social media notifications and breaking news alerts, it’s easy to forget your loan payment – and nothing hurts your credit more. Thirty-five percent of your score is based on payment history, so put your credit cards and other loans on autopay to ensure you’re never late again.
5. Don’t Close Old Accounts: Credit history makes up 15 percent of your credit score, so closing a credit card may lower your score. The rule of thumb is never to owe more than 20 percent of your available credit; closing a card reduces the credit-to-debt ratio, which could bring down your score.
6. Review Statements: Check your loan statements every month to ensure they’re accurate and report any errors immediately.
7. Know Your Credit Report: Request a free report each year at annualcreditreport.com to ensure your credit history is accurate and up-to-date.