Your guide to personal finance
10 Tips to build your credit
- Establish the smallest amount of unsecured credit that you can, with a BANK - not a retail store. Often in the form of a credit card, and minimum is $250 - $500 typically.
- Make a purchase(s) that you are confident you can pay-off in 30 days, and wait for those 30 days to pass before you pay (a candy bar, a hamburger, or a tank of gas). Then pay the balance in full, every month for at least 8 -12 months. The purchase does not need to be large, just something that can be paid off to $0 when it is due each month when the statement comes.
- Request an increase on that credit account after 12 months, and then continue to pay the full balance each month - you will have a score by then.
- Monthly payment history, and paying the balances in full is how a credit score is determined.
- NEVER let any payment get behind, that includes: water bill, electric bill, medical bill, apartment rent, anything that you are obligated to pay. If you cannot pay, then make an agreement with that company to pay it off, and make sure they know you are doing what you can, even if that is sending $10/month to them, for 5 years. If they agree to it, then do it. This will keep them from reporting you, in turn affecting your credit score/rating.