If you are fresh out of college or want to buy a home for the first time, you need to pave the way to a good credit score. Here are some ways to get started:

1. Credit cards
Open a couple of credit card accounts and make every payment on time. Nothing matters to your credit more than your payment history. You can automate your payments online or set up calendar reminders so you don’t forget. Don’t overspend – make sure you use less than 30% of your credit limit – and try to avoid paying interest – every dollar of interest you pay is a dollar you aren’t saving or using for something you need. A great option if you don’t have credit at all is to get a secured credit card, for which you require to pay a security deposit (just make sure they report your payment record to the big three credit bureaus: Equifax, TransUnion and Experian), or a store credit card. When shopping around for a credit card compare interest rates, annual fees and card features.

2. Take out a dummy loan
This is great if you don’t have any credit score or are new to earning credit. Apply for a small cash loan at your bank or credit union, put the loan amount in savings, and pay diligently on it once a month when they send your statement. This creates a paper trail of timely payments that will help set your credit in the right direction.

3. Don’t avoid student loans
Making your student loan payments on time can also help your credit score. It is a type of installment loan and, if you already have a credit card, having a mix of credit is healthy for your score. Having a good credit score can create the opportunity to refinance your student loans at a better rate down the road too.

4. Ask your utility company, cell phone provider and landlord to report your payments to the three major credit bureaus, as long as you have a strong on-time payment record.

5. Shop for a loan before car shopping
Find a loan with the lowest rate possible before walking into an auto dealer’s lot. Chances are the dealer’s rates are not the cheapest. The most important thing for your credit score is to be able to pay your balances in full every month. | (602) 565-6366 |


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