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Building Your Credit

What You'll Learn

  • Establishing good credit involves building and maintaining it
  • Opening a few credit card accounts and using them responsibly can help you build excellent credit
  • The better your credit, the better your loan terms

Learning how to use credit wisely can put you one step closer to purchasing a home. The credit decisions you make today will impact your financial future. But, before you can begin to use credit wisely, you will need to build your credit.

Here are a few tips to help get you started:

  • Open checking and savings accounts. When you open a checking and savings account never bounce checks, make regular deposits, and keep you balance above the minimum
  • Use credit cards responsibly. Credit cards are con­venient and easy to use, so make sure you use them responsibly. If you allow your credit cards to reach high, unpaid balances, or only pay the minimum amount due, they can cost you hundreds or thousands of dollars in interest. On the other hand, if you pay them on time each month – and ideally in full – credits cards can help you build excellent credit.
  • Establish credit independently. It's important for both partners in a marriage or relationship to estab­lish their own credit. Establishing credit independently can help achieve your financial goals and protect against unforeseen circumstances like death, divorce, or other life changes.
  • Honor your promise to pay. It's essential that you honor your promise to repay loans or credit cards on time and in the amounts scheduled. Contact your lender or creditor immediately if you are experiencing difficulty making payments.

Good credit is an important part of your home buying power, but good credit is no accident. It's the result of discipline and planning. Start today, and your good credit will pay off with better loan terms and lower interest rates.

 Key Takeaways

  1. Good credit is essential to buying a home

  2. It's critical you honor your promises to repay your debts on time

  3. Even if you're married, both partners must work to build and maintain good credit

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