Credit is vital to your financial life. If you manage it well, credit can help you secure financing for a new house, a car, or a business venture. It’s never too early in life to learn about how to manage credit properly; the earlier a person learns how, the more successful his financial life will be as an adult. Having access to capital is always exciting and necessary, too, but for some people, building it means that they take on debt. This should be avoided at all costs because debt weighs you down. Here are the four ways to build awesome credit without taking on debt.
Remember to Pay Bills on Time
There is no exception to this rule: Always be sure to pay all of your bills on time. Always! This is one of the fastest and most efficient ways that you can build up solid credit without taking on any debt. Even if you’re not able to pay the full amount of the bill, then you should at least make the minimum payment. Even these small payments can make an important difference in the amount of interest you’ll be expected to pay.
Establish a Credit History
It’s vital that you establish a credit history. This can help you in so many different areas in your financial life, but you must manage it properly. The beginning of establishing a good history is based on applying for a new card, even though it may be just for the lowest credit around. You should then utilize that card to pay for your monthly expenditures, being sure to pay off your balance at the close of the month. If you’re late by even one day, that can brand you.
Just Borrow What You Can Afford
You should get into a habit of just charging what you’re able to afford. This allows your future lenders to observe that you’re a very responsible borrower. You’re going to find it a lot easier to obtain new credit and also borrow money when you demonstrate that you borrow only what you can pay back. In addition, if you only charge what you can actually afford, you are able to avoid exorbitant debt.
Carry a Balance the Proper Way
If you carry a balance on your card, it isn’t necessarily a bad situation. For instance, you can make greater than the minimum payment every month to pay off the balance as fast as you can. Continue to do whatever it takes to avoid making late card payments, and ensure that the balance remains at a fair level. If you’re meticulous enough about obeying these rules, then carrying a balance on the card won’t damage your score.
These are the four best ways to build up solid credit minus any of the debt. Getting successful in this pursuit involves just having the discipline to do small things consistently. Something as basic as remembering to pay your bills on time will be a big help. Even carrying a balance doesn’t have to be a bad thing with proper management.