Surely on many occasions you have heard how recommendable it is to have personal finance healthy. Among the main reasons to have them is generating a good credit history he Credit bureau.
This is also very helpful when you ask for a auto loan, mortgage or credit card. Next we tell you how you can create your circle of credit from scratch and some benefits to do so.
How to create a credit history?
- Get a Social Security number (SSN) or identity document: To begin, it will be necessary to have a Social Security number (in the case of the United States, for example) or an identity document valid in your country. This will allow you to open accounts and apply for credit.
- Open a savings or checking account: You can start by opening a bank account in your name. Be sure to maintain a minimum balance and avoid incurring overdrafts or negative balances, as this can negatively affect your credit history.
- Apply for a secured credit card: This requires a security deposit that is generally equal to the credit limit that will be granted to you. Use the card responsibly, making small purchases and paying the balance in full each month. This shows that you are a reliable and responsible borrower.
- Consider a small loan: If you’re prepared to take on more credit responsibility, you can apply for a small loan, such as a personal or car loan. Make sure you make payments on time and comply with the terms of the loan.
- Keep debt low and use credit sparingly: Avoid going into excessive debt and use credit wisely. Try to keep your credit utilization (the percentage of your credit limit used) below 30%. This shows that you can manage your debt responsibly.
- Pay your bills on time: One of the most important factors in building a good credit history is paying all your bills on time. This includes credit card payments, loans, utility bills, and any other debt you owe. Late payments can have a negative impact on your credit history.
- Monitor your credit history: Order free copies of your credit report annually and review the details regularly. This will allow you to identify and correct any errors or discrepancies that may affect your credit history.
Remember that building a positive credit history takes time. Maintain good financial habits over time and you’ll see your credit history gradually improve.
Advantages of creating a credit history
- Access to loans and credit.
- Better loan conditions.
- Facilitates the rental of housing.
- It can be considered in labor contracting processes.
- It can influence insurance premiums.
- Avoid security deposits on utilities.
- Facilitates obtaining telecommunications contracts.
A good credit history is achieved by managing your finances responsibly, paying your debts on time, and keeping your indebtedness low.
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