The Basics of Healthy Credit Building
Building a healthy credit score is one of the primary goals of an individual or a growing business. As an individual, it helps you with securing employment, home rental, and lower insurance rates. It enables a business to qualify more easily for loans and get better terms on those loans. This gives your company the cash you need for further growth and expansion. You can also get better terms from suppliers with a solid credit score. Here are some credit building tips for individuals and businesses.
Establish Credit History
The first step in credit building is to initiate a credit history. One option is to obtain a secured credit card, which means that you use a cash deposit as collateral for your payments. A credit-builder loan, which reports payments to credit bureaus and releases the funds to you when the loan is paid off, is another possibility. You could also get an unsecured credit card with a co-signer who has good credit.
Pay on Time
It is imperative for healthy credit building that you not only make your credit card payments but also your utility bills and other debt obligations on time. Tardy payments cause your credit score to drop. Additionally, unpaid bills may be transferred to a collection agency, which profoundly impacts your credit in a negative way.
Keep Your Credit Utilization Ratio Low
Your credit utilization ratio compares how much you owe on your credit cards with the limits of the cards. To maintain a healthy credit score, don’t let the utilization ratios go past 30 percent of your credit limits. Be cautious about opening too many new accounts, as part of your credit score hinges on the average age of the accounts. For this reason, once you’ve established accounts, keep them open unless their fees are exorbitant.
Check Credit Reports
Credit reports offer a history of how you use your credit. Check your reports each year, and correct any mistakes that you detect by contacting the appropriate credit reporting agencies.
For more advice on personal and business credit building, get in touch with Uraeus Capital Funding.