How To Build Your Credit
Do you have little to no credit history?
Not sure how and where to start when it comes to building your creditworthiness?
If you need some direction on how to build your credit then you’ve come to the right place. In this post I’m going to share with you some simple yet important steps you should take to establish a healthy and diverse credit profile.
Credit is simply your ability to obtain goods or services before payment, based on the trust that payment will be made in the future.
For creditors a majority of that trust is determined by your credit report and FICO® scores.
When it comes to applying for credit, your FICO® scores will most likely be used since it speeds up the approval process.
You have three main FICO® scores, one from each of the three major consumer credit reporting agencies, Equifax, Transunion and Experian.
For your FICO® scores to be calculated, each of your credit reports must have at least the following:
- One account open for a minimum of six months
- One account that has been updated in the past six months
For starters one of the first things you should acquire is a major credit card and one of the easiest ones to qualify for if you’re new to the credit world is a Capital One card.
If you have bad credit and need to restore your credit then you will need to open a secured credit card. Secured credit cards are ideal for reestablishing credit after going through chapter 7 or chapter 13 bankruptcies.
However, having one active account reporting on your credit reports hardly provides enough information for a creditor to assess your level of risk.
Ever heard of having ‘too little of credit to determine risk’?
When it comes to learning how to build your credit it only makes sense to understand the factors that make up your credit score and how to best leverage the scoring system to your advantage.
The five factors that make up your FICO® score are payment history, total debt utilization, length of credit history, new credit, and account diversity.
The good news is there are viable strategies that you can take advantage of today that can enable you to build your credit and payment history in a shorter period of time. Strategies such as becoming a legitimate authorized user are covered in detail in my free course ‘7 Steps To Superior Credit’.
In this course we go through each step of the credit building process whether you are new to credit or need to rebuild your credit after going through tough financial times.
Remember, to build your credit you should not only focus on acquiring credit cards, it takes a diversity of credit (revolving credit, installment credit, store credit, gas credit, etc.) to establish a creditworthy profile.
In addition, how you use credit and the amount of credit you use plays a huge role in how you build your credit reports and FICO® Scores.
Ready to build your credit report and FICO® scores? Submit your name and email below to receive my FREE course ‘7 Steps To Superior Credit’ ($497 value) =>
To Your Success In Business and in Life!
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, and All Business.com .His articles and blog; Business Credit Blogger.com, have been featured in ‘American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’. You can also find Marco on Google+.
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