How to build, maintain good credit

Why your credit score is important

By Mary Claire Patton - Digital Content Curator

A credit score is an important number that follows you throughout your life from the moment you get your first card.

Credit scores determine what type of loans you can qualify for and what kind of interest rates you can get.

The better your credit score, the lower your interest rate and the more money you have in your pocket.

How to build credit

Applying for a credit card is a good way to build credit if you’re starting from scratch.

Unsecured credit cards can be easy to qualify for, but they typically have high annual fees.

Secured credit cards require the borrower to make a deposit. The credit limit on the card is usually the same amount as the deposit. Secured cards can sometimes have annual fees as well.

Student credit cards have high acceptance rates and sometimes offer rewards. These cards tend to have high interest rates and lower credit limits.

Retail credit cards are another option. These cards tend to have higher interest rates than normal credit cards, but approval is possible even with no credit history.

How to maintain good credit

The best way to maintain good credit is to make payments on time.

Pay attention to due dates and use online payment options that let you schedule payments ahead of time.

Credit card bills, utility bills, rent, a car note or any other service for which you owe money can all affect your credit score if you don’t pay on time.

Automatic payments can also be useful for helping pay credit cards in a timely, manageable way.

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You can set up an automatic payment plan with your bank to pay your bills monthly, directly from your bank account.

Never skip credit card payments, and always pay at least the minimum.

Paying less than the minimum or paying late can lower your credit score.

What’s a good score?

There are many different credit scores. The number typically ranges from 300 to 850.

Lenders have different definitions of a good credit score; where one lender may approve a loan, another might deny it.

The following rating scale is used by Credit.com:

• Excellent credit: 750-plus
• Good credit: 700-749
• Fair credit: 650-699
• Poor credit: 600-649
• Bad credit: Below 600

Many different websites, like WalletHub or Credit Karma, now allow you to check your credit score for free.

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