The credit history has a very vital role to play in the life of a person. almost every aspect of life, including a home and a job is tied to this important document. Building a good credit history is a step by step process that requires you to put in conscious effort at every stage of life. while this may seem to be a tough task, it is not definitely impossible and will be worth the effort you put in.
First of all, if you are intent on building a good credit history, opt for just one credit card and manage it wisely. One of the main reasons for people to fall prey to bad credit is the fact that they opt for multiple credit cards at the same time and end up spending on all of them and miss making their payments on time. In order to prevent all this from happening, opt for a card that you think is the best for your needs and use it sparingly.
Remember to make your payments on time consistently. Do not spend over thirty percent of the total credit limit available on the card as any amount spent above this limit gets reported to the credit bureau. Use the card only for making purchases and not for cash advances. Opting for a cash advance on your credit card can have devastating effects if you don’t repay it at the earliest. Not only will the cash advance attract a higher rate of interest, there is also no grace period associated with repayment of the cash and the finance charges are also higher.
When making purchases, opt for only essential commodities and refrain from buying expensive items that are out of your reach just because you have a credit card. Spending within the amount you can afford to repay is the key to building a good credit history.
Try paying off the balance on your credit cards at the end of each month. If you are not able to do so, at least make the minimum payment due on your card regularly. Skipping any payment can lead to a black mark on your credit history. Do not give rise to late payment charges which are also reported to the credit bureaus.
A good credit history will prove to be your ally when you apply for newer credit cards, loans or mortgages. Banks will favor your application form and be willing to offer you favorable terms.