Approximately 16% of Americans have poor credit. Not only will it affect your ability to get a loan, but it can affect your insurance rates as well.

In some cases, it can even affect your job prospects—this is especially true if you’re trying to land a management or finance role.

The good news is that it is possible to improve your credit score.

Interested? Want to learn how to build credit the right way? If so, you’re at the right place.

We’ll be going over everything in detail below. Keep reading for a credit building guide!

  1. Always Pay Your Bills On Time 

Your credit score will suffer if you have any overdue bills. This includes credit card bills, overdraft fees, utility bills, student loans, and more.

The opposite is also true; your credit score will go up if you consistently pay all of your bills on time. If anything, it’s the best way to build credit.

For example, you can set up automatic payments. You can also use reminder tools—that way, you’ll be able to stay on top of all your bills.

If you can’t pay your bill in full, at least pay the minimum amount. While that won’t make much of an impact as far as your debt goes, it won’t affect your credit score.

  1. Use a Secured Credit Card 

Consider using secured credit cards to build credit. They’re different from regular credit cards in that money must be deposited for you to open up an account; this amount will then become your credit limit.

Other than that, they function like any other credit card. For one thing, they’ll report your credit activity to all the major credit bureaus.

For those who want to improve their credit score, it’s highly recommended that you keep the balance low. For example, you can use it for small, regular purchases such as gas.

  1. Check Your Credit Report

Can you buy home with no credit? It’s possible, but chances are, you’ll have to pay a much larger down payment. Not to mention that your interest rates will be a lot higher.

One way to prevent this is by checking your credit report for errors (you can get it for free once a year from one of the major credit reporting agencies). Assuming there’s been a mistake, it can have a significant impact on your credit score.

For instance, some payments may be marked late even when you paid on time. If that’s the case, make sure to dispute the error.

Depending on the issue, it can take the credit bureau up to 30 days (sometimes longer) to respond.

Credit Building the Right Way

There are several things that you can do when it comes to credit building. It can take some time for your score to go up, but it’ll be worth it in the end, especially if you’re trying to apply for something like a mortgage.

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