How To Build A Good Credit Score: A Step-by-Step Guide

According to Experian, the average American has a credit score of 710. A good credit score can give you access to lower interest rates on loans, better credit card terms, and even cheaper insurance premiums. But building a good credit score takes time and effort. Here's a step-by-step guide to help you get started:

1. **Check your credit report:** The first step to building a good credit score is to check your credit report. You can get a free copy of your credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once per year at annualcreditreport.com. Review your credit report carefully for any errors or inaccuracies. If you find any mistakes, dispute them with the credit bureau immediately.

2. **Pay your bills on time:** Payment history is the most important factor in your credit score. Make sure to pay all of your bills on time, every time. Even one missed payment can have a negative impact on your score. If you have trouble making ends meet, consider setting up a payment plan with your creditors.

3. **Keep your credit utilization low:** Credit utilization is the amount of credit you're using compared to your total available credit. Lenders like to see that you're not using too much of your available credit, so it's important to keep your credit utilization ratio below 30%. If your credit utilization is too high, it can lower your credit score.

4. **Don't open too many new credit accounts:** Each time you apply for a new credit account, a hard inquiry is made on your credit report. Too many hard inquiries in a short period of time can lower your credit score. Only apply for new credit when you need it, and space out your applications.

5. **Build a positive credit history:** The longer your credit history, the better. If you're young and don't have a lot of credit history, consider getting a secured credit card or becoming an authorized user on someone else's credit card. This will help you build a positive credit history and improve your score.

6. **Monitor your credit score:** It's important to monitor your credit score regularly so you can track your progress and identify any potential problems. You can get a free copy of your credit score from many different websites, including Credit Karma, NerdWallet, and WalletHub.

Building a good credit score takes time and effort, but it's worth it in the long run. By following these tips, you can improve your credit score and qualify for better financial products.