Your credit score is a financial tool. That means it can either be a hammer or a lever, depending on how good it is. It will significantly help in approving different loans including car, business, and home mortgage loans around the Provo, Utah area. It is also used to determine who will get the best phone plans and who will have bigger deposits to get utilities. Landlords use it to decide who they will rent their apartments to.
Why your credit score matters
High credit scores can be an advantage to get great deals on phone plans, apartments, credit cards, insurance premiums, and loans. If you have bad credit scores, it can hammer you into paying more or missing out. Take note that the higher interest rate or lifetime cost of having mediocre or bad credit can be more than six figures.
Credit scores are already a vital part of everyone’s financial life. That’s why it’s essential to pay attention to it. You also need to understand that your actions can affect the numbers. You have the control to defend, build, and take advantage of your good credit scores regardless of your income and age.
How to build credit without debt
There are lots of people who don’t have credit scores mainly because they have not utilized credit or have not used it recently enough to make scores. There’s a couple of ways to build credit, and they are the following:
1. Credit-builder loan application
In this credit-builder loan, it will place your borrowed money into a savings account or certificate of deposit, which you can claim after completing the 12-month payments. Lots of community development financial institutions and credit unions offer this credit-builder loan.
2. Secured credit card application
If you apply for a secured credit card, it will provide you with a line of credit equal to your deposited amount with the issuing bank. It will also help you in building your credit. After acquiring a score, utilize a credit score simulator to know what actions might hurt and help it.
How to increase credit score with good habits
Here are some tips on how to improve your credit score with good habits:
- It’s crucial to pay your bills on time to grow your scores.
- It’s also essential to regularly but lightly use your credit account. Take note of the credit limit of each card. Remember that you should not have a charge of more than 30% of its limit.
- Practice paying your balances in full. Note that you should not carry any debt if your main goal is increasing your credit score. If you can’t pay your balances in full, you should try to pay it as immediately as possible.
- If you try to improve your credit score, you should avoid closing accounts. If you already have high scores, let’s say 760 or more, you can now choose to close at most two accounts without much damage. However, you should still try to maintain those credit cards that have the highest limit.
Your credit score will reflect your personal and financial capabilities, so it’s important to take care of it. Many people have a wrong perception of credit score. Most of them think that it is only important to get approved for a credit card or a loan. But it goes far beyond that.