Tips for Establishing Good Credit

Establishing good credit can be one of the most important financial moves a person makes in a lifetime. When the track record is strong, charged interest rates on everything from automobile loans and leases to credit cards and mortgages tend to be lower. That means the cost of borrowing money is less. Savings may also be enjoyed on such things as automobile and homeowner insurance where credit rating does play a role in the premiums charged. While the importance of good credit cannot be denied, establishing a history can be a tricky undertaking. Fortunately, there are some tips that can help people get started in building a history that can pay off with better rates.

Here are just a few tips that can help people get started in building a strong financial track record:

• Establish a deposit account as soon as possible – If the ultimate goal is to build good credit to buy an automobile or purchase a home, creating a savings and/or checking account is a good place to start. Working with a credit union may be the best move for more people just starting out because of higher interest yields and lower deposit requirements. Once a savings account is opened, make it a habit to deposit regularly. Even $10 a paycheck can add up nicely over time.
• Open a low-limit credit card account – It is best to avoid too much credit or too many credit accounts when first starting out. If the plan is to create a strong and positive history, get started with a low-limit card that is easy to manage. Credit unions can help members explore their options and are likely to offer products that charge lower interest than others.
• Keep up with payments – Once a credit card is in hand, learn to use it wisely. That means not going overboard with purchases, staying within the limit and making timely payments. It is best to avoid maxing out a credit card and to ensure that payments are beyond the minimum.

Good credit is key for helping people make life’s bigger purchases for less. When credit is strong, the cost of borrowing tends to be lower. To capitalize on the savings good credit may afford and for help establishing it, consider becoming a credit union member.

Serving our community since 1931, a href=https://www.cutx.org/About-UsCUTX is owned by its members and operated in accordance with the laws governing credit unions in the State of Texas.