What is the Importance of Credit History and How to Build a Strong History?
Credit history accounts for about 15% of the calculation for your credit score, which is why it is important for you to have a credit history. Since your credit score is dependent on you having a solid (or really any) credit history, building up a strong history will make a huge difference in having a high credit score. Not having a credit history will not only negatively impact on your credit score, but it could also have a huge impact on your buying capabilities. This means that it is very important to build up a strong credit history.
It is best to start building up your credit at a younger age. When you can get loans, try to see if your parents will co-sign a loan for you or help you get a credit card. By being responsible and paying these payments, you will be able to build up your credit. You will need to take a great deal of care in making at least the minimum payments on time. The minute you miss a payment or fail to pay the minimum amount when due, it could instantly have a negative impact on your credit.
As you are older and can open your own accounts, you can open more accounts to help add diversity to your credit but do not open too many as this can negatively impact your credit. In addition to ensuring that you make at least the minimum payments, you should be sure to keep these balances low when compared to your credit limits. This is known as a “utilization rate” and it can have a huge impact on your credit. Properly managing your credit shows lenders that you are someone who is a good credit risk. By continuing this trend of good management for a long time, you are going to have a very strong credit history.
Lastly, you do need to apply for credit in a wise manner. You should never apply for several accounts at a time during a short period of time. If you take a large amount of debt in a short period of time, this can be a sign of a high credit risk. Only apply for a credit card when you need it and only for the amount that you need it for. You do not have to accept a credit card just because they offer it, such as in the checkout line at a retail store.
Establish credit as young as you can, will give you the best advantages here when it comes to building up a strong credit history. However, sometimes even your credit history cannot help you if you get into trouble. When you find yourself having issues with your credit, Advanced Credit Therapy can help you to get your credit back on track. We have the knowledge and expertise that is essential in rebuilding your credit so that you can reap the benefits of having good or excellent credit. We also can help you to build up a strong credit history so that you can get things like the car or home of your dreams.