When you decide to get educated on your credit score and take a look at how your numbers are doing, it can be a little jolting the first time. If you don’t like what you see then you can start to become overwhelmed with a variety of questions asking yourself how to got to this point in the first place, and most importantly how you can get out of it.
There can be a lot of information surrounding credit and how to improve your score and how to tackle your credit debt. There are a lot of conflicting opinions and ideas on what the best way to proceed is. Therefore, try to slow down and focus on the main ideas behind improving your credit score that everyone can agree on.
No Credit Is The Same As Bad Credit
When you haven’t yet established your credit, you might as well have terrible credit. This can be a tough truth to swallow, but the fact is that having no credit history causes you to have a low score. This means that you will have to start from the ground up when it comes to establishing your credit score in the financial world.
You will want to apply for your first credit card in your early 20’s and try to find as low of an interest rate as possible. The credit limit will probably be quite low, so just remember to not use it too much and after a while of showing that you are a responsible credit user, you will start to get approved for bigger lines of credit and your credit score will climb.
Don’t Apply For Too Many Credit Cards
Every time that you apply for a credit card you are hitting your credit report with what is referred to as a hard inquiry. This will take points away from your score and over time add up and lower your score more and more.
You want to limit the number of credit cards that you apply for otherwise, it can create a red flag for creditors.
Pay Off Your Debts
You should make sure that you are paying off your credit cards each month consistently. This means no late payments and paying more than the minimum payment due to avoid interest piling up.
This is a huge contributing factor to your overall credit score and should be watched closely. You may want to sign up for auto-payments in order to minimize your chances of paying late.
Keep Credit Usage Low
You want to make sure that you aren’t using more than 30% of your total credit allowance at a single time. Otherwise, this has a very big impact on your credit score.