Tactics to Build Credit

several credit cards stacked on a table

If you are looking to build your credit as a new adult or to recover from past financial mistakes, there are a few things you can do to to begin to build a good credit history. Once you have built a good credit history, you will be able to apply for credit cards, home loans, car loans, and more.

Open a checking account

All credit card companies like to see that their potential borrowers are responsible when given the opportunity to borrow money. However, if you only have a savings account, or no bank account at all, then there is no real chance that you could ever become overdrawn. A way to correct this is to open a checking account with a bank and use it responsibly In any application you make to a credit card issuer they are going to ask you for details of your current accounts so you may as well take the opportunity of using history to help in establishing your credit rating.

Have all your utility bills in your name

A second way you can start to build up credit brownie points is to put all your utility bills, e.g. your water, gas and telephone bills, in your name and make sure that you pay them all on time! Again, it is very likely that the credit card issuer will ask you to provide them with at least one utility bill when you apply for the card, so you may as well make use of this now as a tactic to start building up your credit history.

Apply for a charge card or store card

Store branded credit cards are generally easier to get than a traditional major credit care (i.e Visa or Mastercard). While it is true that most store cards charge really high interest rates, you can use it to make small purchases that you pay off over one or two months. This will begin to lay the groundwork showing you can use a credit card in a responsible way. Eventually, you can apply for a major credit card with, hopefully, a lower rate.

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Get a car loan

Applying for, and repaying in a timely manner, any type of loan is one of the fastest credit building tactics you can use. If you drive, you should give serious thought to taking out a car loan – even if it is just to refinance repairs on your existing car! There are lots of lenders who specialize in helping people with poor or no credit. A word of caution, though. Only do this if you are absolutely positive you can afford the payments. If you default on a loan, all the hard work you have put in to building your credit will be for nothing.

Do a credit rating check

Once you have completed the 4 credit building tactics above, perform a credit check. Provided you have been sensible with repaying all of you debts and bills in a timely manner, you should now have sufficient creditworthiness. In the event that you find an error on your credit report, make sure you take step to fix this as soon as you can. Furthermore, it is good practice to get into the habit of ordering credit check on an annual basis to keep a track of your credit rating history as this will have the biggest effect on your credit building skills!

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