How to establish a good credit score
Your credit score and your ability to afford credit will help you to achieve your financial goals. It's a personal asset, an investment in your future, and the key to financial security and greater financial freedom, all rolled into one.
It's also a major determining factor when you buy a car, rent your own place, or get a cell phone contract. Employers are also known to look at your credit score during the job application process. For these reasons, it's important to be on top of your credit score.
But, what if you've never had a real job before? What if you've just finished school or varsity? Chances are you’ve never used a credit card in your name before. So, it's unlikely that you have a credit record in your name.
In this blog post, we'll look at a few easy ways that you can start to work on your credit score.
Open a bank account
The first step to owning your finances is opening a bank account. When shopping around for options, make sure you consider bank fees and accessibility. You should also consider whether or not the bank account has any unique features that set it apart from other bank accounts. For example, a shared banking option makes it easy for you to share money with your family.
Get a credit card
A credit card is the easiest way to build a credit score. Once you open your bank account, it should be easy to apply for your credit card online. It may be tempting to go on a wild shopping spree when you get your credit card, but take care not to create huge bills that you will struggle to pay off later. These are recorded on your credit report and could hurt your overall score!
Make your payments on time
Now that you're spending on credit, you'll have to make sure that you pay your credit card bills on time. For maximum benefit, pay the full amount each month. The same goes for your other expenses, such as water and lights, car, and rent. Your payment habits are recorded on your credit report and affect your credit score.
Find a job you love
Your first job may not be your dream job, but it's an important milestone and helps you gain the experience you need to build a successful career. It'll also pay those bills! Steady employment also reflects on your credit report, so steady employment is vital at this stage in your career, especially as you try to cover your bills and stay out of debt.
Next step: download your credit report!
When you apply for credit, credit providers will do a credit check on you at the credit bureau. This is to determine your creditworthiness and your ability to repay any credit given to you. While you may not have many accounts listed on your Credit Report at the moment, it helps to download your Credit Report and make sure your details are accurate. You should also ensure that all accounts listed have been opened by you. Report unfamiliar accounts as this is usually a sign of identity theft!