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5 Steps to Starting Your Credit Journey

Updated: May 9, 2023

When you are just starting out in your credit journey it can be difficult to figure out where to start. This 5 step guid will give you key ways to establish good credit so you can be financial stability and independence. A good credit score can help you qualify for renting an apartment, getting loans, secure favorable interest rates, and even help you land a job. It can take some time but be patient the investment in yourself is worth the effort.

1. Understand what credit is and how it works.

Credit is an agreement between you and a lender that allows you to borrow money with the promise to repay it in the future. Your credit score is a numerical representation of how well you manage credit. It ranges from 300 to 850, and the higher the score, the better.

2. Open a credit card account.

One of the easiest ways to establish credit is by opening a credit card account. If you have no credit history, start with a secured credit card, which requires a cash deposit that serves as collateral. Use the card responsibly by making small purchases and paying your balance on time every month. At FCFNPO, we recommend opening a secured credit card with Credit Card Builder to help build your credit. Click here to get started.

3. Pay your bills on time.

Your payment history is the most crucial factor in determining your credit score. Paying your bills on time, including credit card bills, student loans, and utility bills, can help you establish a positive payment history. Establish positive payment history and lower utilization.

4. Keep your credit utilization low.

Credit utilization refers to the amount of credit you use compared to your credit limit. A high credit utilization rate can negatively impact your credit score. To keep your utilization low, try to keep your balances below 30% of your credit limit.

5. Monitor your credit score regularly.

Monitoring your credit score regularly can help you catch errors or fraudulent activity on your credit report. You can request a free copy of your credit report every year from each of the three credit bureaus - Equifax, Experian, and TransUnion.

Building credit takes time, so be patient and persistent. Remember to use credit responsibly and make timely payments to establish a positive credit history. By following these tips, you can build a solid credit foundation and set yourself up for financial success in the future.

Disclosure: For Change Financial only recommends products we would use ourselves. All opinions expressed here are our own. This page may contain affiliate links and we may earn a small commission, at no extra cost to you. Read our full privacy policy on our website.

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