The Dos and Don’ts of Building Credit: Tips for Success

When it comes to building credit, there are many factors to consider. Building credit can be a slow and steady process that requires patience and discipline. However, the benefits of having a good credit score are numerous, including the ability to qualify for loans, credit cards, and even better interest rates. Let’s discuss the dos and don’ts of building credit to help you achieve success.

DO make on-time payments. One of the most important factors in building credit is making on-time payments. This shows lenders that you are responsible and reliable, which can improve your credit score. Set up automatic payments or reminders to ensure that you never miss a payment.

DON’T apply for too much credit at once. Applying for too much credit at once can hurt your credit score. This is because each application will result in a hard inquiry on your credit report, which can lower your score. Instead, only apply for credit when you really need it and space out your applications.

DO keep your credit utilization low. Credit utilization is the amount of credit you are using compared to the amount you have available. Ideally, you should keep your credit utilization below 10% to improve your credit score. This shows lenders that you are not relying too heavily on credit and are using it responsibly.

DON’T close old credit accounts. Closing old credit accounts can hurt your credit score by lowering your available credit and increasing your credit utilization. Instead, keep your old accounts open and use them occasionally to keep them active.

DO monitor your credit report. Regularly checking your credit report can help you identify errors or fraud that could be hurting your credit score. You can request a free credit report from each of the three major credit bureaus once a year by going to

DON’T ignore your debts. Ignoring your debts can lead to collections, which can severely damage your credit score. Instead, work with your lenders to set up payment plans or negotiate a settlement to pay off your debts.

DO diversify your credit. Having a mix of different types of credit, such as credit cards, auto loans, and student loans, can show lenders that you are able to handle different types of debt. However, don’t take on more credit than you can handle.

DON’T cosign for someone else’s loan. Cosigning for someone else’s loan can put your credit at risk if they fail to make payments. Only cosign if you are willing and able to take on the full responsibility of the loan.

Building credit takes time and discipline, but following these dos and don’ts can help you achieve success. By making on-time payments, keeping your credit utilization low, and monitoring your credit report, you can improve your credit score and qualify for better credit options.

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