Learning how to use credit wisely can put you one step closer to renting a home, buying a home, financing a car, and more. The credit decisions you make today will impact your financial future in many ways. 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:
- Have your rent reported. Some rental management companies report that information to the credit bureaus. Paying your rent on time and in full each month can help you establish and build good credit if you are renting from such a company.
- Open checking and savings accounts. When you open a checking and savings account never bounce checks, make regular deposits, and keep your 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 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 buying power—for both renters and homebuyers alike. But good credit is no accident. It’s the result of discipline and planning. Start today and your good credit will pay off.