Your credit score is the largest tool you will ever have when it comes to your finances. No matter how much money you have in the bank, if you have bad credit, it will cost you thousands of dollars if you plan to make a big purchase. It may even be the determining factor to whether you can make that purchase or not. If your credit score is too low, banks will not lend you money. Good credit on the other hand, can aid you in making all of those purchases you dream of.
If you pay your bills on time consistently month after month, you will have good credit. Let me say that again, paying your bills on time every month will give you good credit. Good credit is the key to getting the banks to loan you the money you need for big dollar purchases.
If you have poor credit and would like to build credit in order to make a big purchase in the future, there are two things that will speed up the process.
Check your credit report for errors .
This should be done each and every year to ensure everything is correct. You may get a free credit report at annualcreditreport. You will have the choice to get all three of the major credit bureau reports or just one. The best option here is to just take one of them for now, so that if there are no errors you can check with the other two credit bureaus later in the year. Many people do not realize that this is an option for them. It is a great way to check your credit report every four months for free. If there are errors in this credit report, it is most likely that there are errors on the other two credit bureau reports as well. Go ahead and order the other two and submit your corrections to them. Detailed information about how to contact them can be found on their site. If everything looks correct, you can come back and choose one of the other credit bureaus in about 4 months to check it again. If you do not know your credit score (FICO), go ahead and pay the fee to see what it is. This will help you when measuring your progress in the months to come
Start paying your bills on time.
No matter how you have paid your bills in the past, start making it a top priority to get them paid on time. Look over your bills due regularly to make sure you have not missed one. Get a pocket calendar and write down the due dates and minimum payment amounts for a quick and easy reference. Paying your bills on time is the first step in having good credit. One late payment will send you right back to where you started, with poor credit. After a few months of paying your bills on time, you will start to receive offers for credit. Ignore these as better offers will come if you do. You do not want to tap yourself out on credit limits just because you can.
The two steps above are just the first steps in fixing poor credit, but are necessary if you want to have the advantages that come along with good credit.