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How To Build Credit: A Guide For Beginners

Embarking on the credit journey is a major stride towards financial maturity, and good credit brings numerous opportunities. Building it is simpler than you might think, requiring consistent, smart choices over time. In this blog, we will delve into four proven strategies on how beginners can build credit.

 

What Is a Good Credit Score?

A credit score, ranging from 300 to 850, signifies your creditworthiness. A score above 670 is considered “good.” Beyond achieving a good score, it’s crucial to grasp the factors contributing to it, including payment history, amounts owed, credit history length, new credit, and types of credit.

Similar to tending to a garden, consistent upkeep is key. A good credit score opens doors to favorable loan terms, making it vital to start building credit early and maintain positive habits for long-term financial well-being.

4 Strategies To Build Credit for the First Time

Credit building requires a specific plan of action and a commitment to following through. Here are four strategies you can implement to self-build credit for the first time.

Choose the Right Credit Card:

  • Opt for a secured credit card, requiring a security deposit as collateral, making it easier for those with no credit history to get approved.
  • Student credit cards with lower credit limits and special perks are also viable options for first-time credit builders.
  • Practice responsible use, keeping credit utilization below 30%, paying bills on time, and making small, regular purchases.

Become an Authorized User:

  • Be added as an authorized user on an established account with someone trustworthy and a strong credit history.
  • Clear communication and trust are essential to avoid financial missteps that could impact both parties’ creditworthiness.

Manage Credit Utilization:

  • Maintain a credit utilization ratio below 30% by making small purchases and frequently paying off credit card balances.
  • Avoid carrying a balance to prevent interest charges and a higher credit utilization ratio.
  • Regularly monitor statements and set up balance alerts to stay informed about credit usage.

Punctual Bill Payments:

  • Pay bills on time consistently, as payment history constitutes 35% of the total credit score.
  • Consider setting up automatic payments for fixed expenses to establish a reputation as a reliable borrower and boost your credit score over time.

How Fidelity Bank Can Support You Through Your Credit Journey

At Fidelity Bank, we’re more than just your bank, we’re your financial ally. Our LifeDesign approach gives you personalized, clear advice that fits your unique financial picture. Whether you’re planning to build your credit from scratch, looking up a financial term, or figuring out how to tap into your home equity, we’re with you every step of the way.

We encourage you to make use of our Credit Insight Tool, available inside your Online Banking Platform. With the tool, you are able to get the advice and actionable steps you need to reach your financial goals and improve your credit score. Enjoy the benefits of this powerful tool for free, without any impact on your credit score.

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