Credit scores are vital for many reasons in our modern world.
You need one to finance a car, get a credit card, get a home mortgage and in many instances even to get your first apartment as well.
Many people don’t know where to start when it comes to building credit, but everyone expects you to know exactly what it is, and have a perfect score.
It’s a problem that many young adults face.
But it’s one that with a little knowledge and help, becomes very easy to tackle.
Here are some basic things you can do to increase your credit score, that are easy to use (because heaven knows I’m all about low maintenance stuff) and best of all free.
First of all, what’s a credit score?
A credit score is just a way for people to know how responsible you are with your money. It’s not a perfect indication, but it’s one a lot of lenders and renters use anyway. Basically, it will take into account your payment history, credit utilization, credit mix, hard inquiries, and negative information, and rank you from 300-850. The higher the number the better.
How can I view my credit score?
There are several free websites out there that you can check your credit score on. Just a couple of these websites are Experian, Equifax, TransUnion, and Credit Karma. It doesn’t really matter which of these sites you decide to use, just close your eyes and point!
How can I improve my credit score?
On his Youtube channel, Graham Stephan talks about how you can improve your credit score, all for free. He even addresses what you can do if you don’t have any credit in the first place! He outlines 5 steps to take, and how to implement these different strategies.
You should definitely go and watch his video, but just to summarize here are the five steps he talks about:
Get a secured credit card with no annual fees.
Pay this card off, on time, every month.
Repeat step 2 for several months, now get an unsecured card.
Get more credit cards, and churn.
Continue this process.
It’s a great system to increase your credit score, especially if you are starting from square one. As he talks about in the video, you should not be paying any interest or annual fees. Because you will be paying this card off every month on time, it won’t matter what the interest percentage is.
Just treat your card like it is cash, and you’ll be golden. Don’t spend on the credit card if you don’t have enough to cover it in the bank. You will never be in the hole, especially if you follow my super simple “budgeting” system (which I call a spending plan).
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