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Individuals who recognize the significance of having a good credit score will work hard to uphold it from day one. Others, who might not consider it to be something important, would end up learning it the hard way. Whether a person is to build credit from scratch or working assiduously to reconstitute it after mistakes along the way, some tried, and true methods can have a positive impact on your credit. Here are some key factors that play an essential role in building a great credit score:

Build Credit the Right Way

Check out America's Best Bookkeepers Are you someone who is looking for a new home or a car? To avail any of those, you will need to first look at your credit ratings. Your credit score is a rating from 300 to 850, which highlights your apparent creditworthiness. The credit score considers many factors, containing the amount of debt, different debt sources, missed payments, and other key financial details.

Lenders and credit card companies heavily rely on your credit score to make important decisions. An inadequate credit score can shell the process of acquiring a loan. To build credit, you will have to make the right financial decisions one after another for a considerable duration of time as it takes years to build solid credentials. There are many possible ways to do that. However, it is essential to stay patient during the whole process and do not make instinctive decisions, instead evaluate the consequences of your every choice thoroughly. Here are a few ways to do it the right way. Check out America's Best Bookkeepers

Check credit report

A credit report is a record maintained by credit bureaus, which highlights your credit score. Three main bureaus keep a separate record, and their recorded scores might vary. You can check your score once a year for free, while if you want to check more often, you may need to pay a certain fee.

It is always a great idea to check your credit report if you are serious about building credit. Take a vigilant look at your credit rating to ensure that all information, such as your married name or a new address, is up to date. Any errors in the report must be disputed immediately so that it could be removed, which eventually will have a positive impact on your solvency.

Maintain immaculate payment history

The best way to build a high credit score is to pay your debts and bills on time. It seems like something pretty obvious, however, it’s easy to overlook, and many people end up with missed payments. Rather than relying on memory to make the payments, you must avail the automated payment options available at your bank for making certain important payments as it would significantly improve timely payments as well as your credit ratings.

Paying your bills and debts promptly is another way of building an impeccable credit score. Your student loans, mortgages, auto loans, utility bills, and all other relevant payments have to be paid within a specific deadline each month or as arranged. You must at all-time be aware of what you owe and make in-time payments one after another without any inconsistencies. It is one of the best ways to build credit in a short duration of time. Check out America's Best Bookkeepers

 

Uphold low credit utilization

A lower credit utilization ratio is another seamless way to maintain your creditworthiness. More debt means that your credit utilization ratio will be on the higher side. Usually, a ratio of 30% or lower is considered to be healthy for good credit, however, if you close down any old accounts or credit cards, it could hurt the ratio significantly, which ultimately will mean a negative impact on the credit score. This is because when you close old accounts, your allowed credit limit also decreases, which surges the percentage and hinders your efforts to build your credit score.

Do not open multiple accounts or credit cards at once

While one credit inquiry won’t affect your credit, more than one inquiry in a short period will do the opposite. The inquiries will show up on the credit report and lower the score. This kind of behavior is not considered normal by the creditors, and it hurts a person’s credibility. 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
Building Credit - Complete Controller

Building credit is not an overnight task as it builds slowly over time. Getting a loan, mortgage, or lease requires you to have a good credit score, highlighting that you have behaved financially responsibly in the past. Good credit reduces risk because you are more likely to make your payments on time. Students and young individuals who are going to start building a credit history must make smart decisions to ensure a safe future. Doing things right from the start has its advantages, and maintaining a good credit score is no exception. Check out America's Best Bookkeepers

Get Help

Anyone in your family who has a good credit history can help you start the credit journey imperiously. Opening up a loan account with a cosigner who has a good credit history is a great way to kick-start the process. The cosigner guarantees the payment if you are unable to make it and should be someone who trusts you. The credit score of a cosigner can suffer as well if you are unable to pay, so all terms must be cleared out to protect both parties before taking this option.

A Starter Credit Card Check out America's Best Bookkeepers

A starter credit card is specifically built for people who are starting their financial journey and usually have lower credit limits of up to $300 – $500. However, interest rates are significantly higher compared to mature credit cards. Student credit cards allow you to gradually build up your credit and upgrade your cards when you build some credit. People with a little bit of credit history can opt for capital one credit card, which has a high rate of approval among starters. These cards come with no annual fees and offer better rewards if you keep a good history of building credit.

Watch your Credit Card Balances

Another significant factor in measuring your credit score’s worthiness is how much revolving credit you have versus how much you’re using. For a better credit rating, the percentage should be on the smaller side, and often the optimum rate in 30% or below. Paying off your balances and keeping them low will ensure that this percentage stays down. Consolidating your credit card balances with a loan can also help you score valuable credit points. Building credit with credit card issuers that accept multiple payments throughout the month should be your priority. Check out America's Best Bookkeepers

Leave Old Debts on the Credit Report

There is a general perception that having debt on your credit report is a bad sign and that you should hurry to get it removed as soon as you pay off the loan. While it is true that negative items affect your credit score for worse and generally stay on your report for almost seven years, getting them removed might not be such a bright idea. If you have paid off the debt, you have converted it into good debt, which is useful for building a credit score. Keeping the old accounts that you have a history of paying open is also recommended by credit building experts. Therefore, never try to get rid of old debts that have been paid off.

Pay Bills on Time

If you are trying to make a big purchase related to a house or car, you must plan for it in advance rather than skimping on your regular bill payments and scrambling for money from here and there. A good credit score requires you to invest time by maintaining a steady flow of payments, month after month. Ruining all of the effort and diligence by missing a single payment is never a bright idea because it will take years to build that again. Building credit requires you to have patience and implement smart strategies to keep your financial and bookkeeping needs in order.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers