I am sure you want to raise your credit score. Having a higher credit score really doesn’t have any disadvantages. Even if you don’t plan on having any real debt, it’s still nice to know if an emergency comes and you need a loan, you can go to a reputable financial institution and not get ripped off. Here is what to do to help your credit score.
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What To Do To Help Your Credit Score
The formula for this is pretty simple:
- Make one or two small purchases each month on your card. Maybe get a credit card for a gas station and only use it to fill the tank. Don’t go over 30% of the available credit line.
- Pay the bill on time and in full.
- Do that over and over again.
If you don’t want revolving debt, you can do this with student loans, car loans, or any other type of loan. Make your payments on time each month consistently. Follow those simple rules and you will be beating off lenders with a stick when it comes time to make responsible purchases.
What Happens When You Don’t Have a Credit Score?
If you are young or have never had any debt, you may go to pull your report and discover you have none. The term is often referred to as a “thin file.” It just means that you don’t have enough history for them to give an informed opinion of your risk.
Do not freak out and go apply for 15 credit cards. The best thing you can do to build your credit is to have one or two small pieces of debt, use them consistently, and pay them on time. And remember if you have no intention of every borrowing money you don’t need a credit score. It’s not required.
There is another time when you may have a zero credit score. If you have paid off all your debt and don’t maintain any revolving credit (like a credit card), eventually everything will fall off your report. It will take years but it can happen. If you choose to do this, you will be able to find companies who will give you a mortgage but it’s a bit more work.
Laura M. Oliver is the author of Singles: Take Control of Your Own Financial Journey. It is available in paperback and Kindle on Amazon.
