How to build credit - Credit & Loan Options How to build credit - Credit & Loan Options

How to build credit

After you’re approved for a credit card, it’s important to use the card in a way that will improve your credit score. Here’s what you need to do to build credit with a credit card:

Pay on time:
The best thing you can do for your credit is to always pay on time. Your payment history is the most significant factor in determining your credit score, and on-time payments will help you get excellent credit.

Watch your FICO® Score:
Although there are multiple types of credit scores, the FICO® Score is the one that lenders use most often. You should check yours at least once every few months to ensure you’re headed in the right direction. Some credit cards include a FICO® Score tracker, but if yours doesn’t, there are also free ways to check your score online.

Keep your balances low:
It’s bad for your credit score if you use too much of your available credit. To avoid this, try to never use more than 20% to 30% of your available credit.

Ask for a credit limit increase:
After nine to 12 months of charging up balances and paying them off in full, consider asking the credit card company for a credit limit increase. A higher credit limit can make it easier to keep your balances below the recommended 20% to 30% ratio.

Keep your account open:
Don’t let your credit card go inactive for too long. Many banks will close an account if it isn’t used for six months or more. By making a small purchase with the card every few months or so, you can make sure that the card stays open and is reported to all three credit bureaus. One factor that affects your credit score is your average account age, so be sure to keep your oldest accounts around as to help boost your score.

Source:the ascent