If you’re looking to build your credit, you’ve probably taken to the Internet to figure out what the best course of action is (which is probably why you’ve ended up here). But don’t believe everything you read on the Internet. There’s a lot of advice out there to help you build credit, but it may not be as useful as you’d think.
- Paying Off Late Payments – If you’ve had trouble paying your bills in the past and let a few slip through the cracks into collections, you may breathe a sigh of relief when you pay those off, hoping now the outside world won’t ever see that late credit card payment. But the fact of the matter is that even once they’re paid off, those late payments stick around to haunt you. Items sent to your credit report can show for over seven years and while your credit score can keep improving, they’ll still be there as a nasty reminder of your mistakes.
What You Should Do – Find ways to pay your bills on time, no matter what. If that means borrowing money from a friend or financial institution, so be it. If you don’t have any options, you can always try out Wonga, which offers short-term loans for emergency borrowing. The funds are deposited to your bank account the next day so you can pay bills on short notice and not have to worry about finding them later on your credit report.
- Opening New Accounts – It’s true that opening bank accounts can help your credit score, but not in the way you think. The accounts on your credit report will earn you big points over long periods of time as you keep them open and in good standing. Opening up too many accounts all at once can actually have the opposite effect – it can do more harm than good to your credit score.
What You Should Do – Open up a checking and savings account with a financial institution and use it wisely. Monitor your balance to avoid overdrawing your balances and check in regularly to make sure you’re in the account that’s best for you. Many banks will offer special accounts for those who have been loyal customers the longest, but only if you ask!
- Closing Out Credit Cards – You’ve finally paid off that credit card you got when you were eighteen, ran up a huge balance and then panicked. You’re probably more than ready to kiss that card goodbye with a nice clean chop with a scissor at this point. But closing out your credit cards will never actually help your credit. Your credit is mostly based off of the amount of money you owe compared to the money you make, if you put it in very simple terms. The more credit that is available to you, the better your credit score becomes.
What You Should Do – Pay off your credit cards, obviously. But don’t get rid of those cards quite yet. Hold on to them for emergencies or to make small purchases that you pay off at the end of each month. This will actually help you to establish credit, instead of giving your credit score a beating.
If you’re looking for credit tips that actually work, you can check out a few here. But what it all really boils down to is responsible spending and borrowing and you’ll find yourself successful in no time!
