The Ultimate Guide to Building Credit from Scratch

The Ultimate Guide to Building Credit from Scratch

What if you had to start over, and build your credit score from scratch? Would you know where to begin? Fortunately, there are many steps you can take to repair your credit score, create positive financial habits and make the most of your opportunities. Follow along with this ultimate guide to building credit from scratch and finally have the financial freedom you deserve!

What is building credit?
Having bad credit is like having your own personal financial black hole. You can’t get a loan, you have a low credit score and your options when it comes to financing homes, cars and education are limited. Bad credit can happen for a variety of reasons: missing payments, maxing out lines of credit or just not keeping up with bills every month.

Create Positive Financial Habits
The most important thing you can do in order to build credit is to establish a positive financial habit. The more positive your habits, such as paying your bills on time and establishing credit accounts, the easier it will be for you to build up a solid credit score. Start by building up one small positive financial habit and keeping it for at least six months before moving on to another one. This way, you’ll have time for each new habit to stabilize and build up strength before moving on. For example, make an effort every month to pay an old debt like a utility bill or cell phone bill in full by its due date.

Monitor Your Score
Monitoring your credit score is just as important as actually improving it. The higher your score, particularly on FICO and VantageScores, can mean lower interest rates on car loans and mortgages, not to mention better chances of securing a rental apartment or being approved for credit cards with better rewards programs. So if you’re planning on buying a home or vehicle in future years, keeping an eye on your credit score could pay off in spades.

Choose a Payment Method That Works For You
Every lender is different and has their own requirements, but making on-time payments consistently is one of the most important factors in building credit. That’s why it’s important to choose a payment method that fits your lifestyle. Whether you choose cash, debit or credit—or pay all at once—the most important thing is paying your bill on time each month.

Prepare Yourself To Max Out Your Opportunities
Your credit score is like a snapshot of your financial habits and how you’ve managed your money. It can either determine whether or not you get approved for certain things—like a mortgage, car loan, and cell phone plan—or how much you have to pay in interest. To max out your opportunities, start by restoring your score with a credit report monitoring service that gives tips on how to build credit . Here are some ways you can prepare yourself