Building Credit Score
Building credit score can be a difficult task; for doing that you need a credit card but without good credit score it is difficult to get a credit card. Following are some of the steps which you might find helpful in building your credit score:
1, You must learn to understand the things which influence the FICO score. It is generally made up of the following factors:
i) Payment history which has a 35% influence over credit score and it works in a simple way: make your payments on time!
ii) Keep your debt balance low in comparison to your credit limit. The influence of this factor on credit score is about 30%. You should, in fact, try to keep you credit utilization to about 30%.
iii) The longer your credit history is the better it is for FICO score. This factor has about 15% influence on your score.
iv) Type of credit you use is also important. Diversification of credit such as auto loans and mortgages would have lesser effect on your credit score in a negative way. This factor influences your credit score by 10%.
v) However, if you apply for too many new credit accounts at the same time you would be risking bringing your credit score down. Influence of this factor is also 10%.
2, Use your credit card regularly. If you don’t use it for too long it might be closed by the issuer which could, in turn, increase your credit utilization.
3, A related advice is to keep your accounts open for as long as possible as it helps with payment history and credit utilization.
4, Every year, check your credit report for errors and negative items which can be disputed.