From buying a car to buying a house to getting that job, your credit score plays a vital role. It pays to have a good one.
“A bad credit can also make it difficult to rent an apartment, go to college or even get a job,” said Lisa Gill, of Consumer Reports.
A low score means that you are riskier for lenders and will pay more interest on loans.
If you are looking to improve or even establish your score, an important first step is to open a bank account.
If your finances are stable, Consumer Reports says you take out several small loans and make monthly payments on time. Over time, this should improve your score.
Consumer Reports also recommends applying for a secure card, which is backed by cash. You can also ask a family member who has good credit to add you to their credit card.
Just be aware that if you miss or are late with a payment it can hurt both your scores.
If you have a debt in collection, pay it off as soon as possible, then pay your bills on time.
“Once you’ve paid off any debt in collection, many credit scoring systems won’t weigh them down heavily when calculating your score,” said Gill.
It is also important to carefully check your credit report. You can get a free credit report here. Challenge any mistakes you might find by sending a certified letter, with proof, to the Big Three Credit Bureaus. They have about 30 days to respond.
Consumer Reports adds that it is wary of any quick credit service that offers help for a fee. You don’t have to pay to repair your credit.
It just takes a solid financial plan and time.