How to Build and Rebuild Your Credit Score

Financial well-being September 28, 2015 By First United Bank

Your credit score is very important, because it affects many aspects of your life. For instance, your credit score is commonly used to assess your ability to qualify for your dream home, car, and other types of loans and credit cards. It’s also used in ways that aren’t as obvious, such as determining car and insurance rates and utility deposits. As a measure of your financial responsibility, a good credit score is very important to maintain.

How do I build my credit score from nothing?

Building a credit score may seem difficult, but with a little planning, it can be accomplished. We should all start this process at an early age. Parents can help their children by co-signing a child’s first car loan or providing the collateral for a secured credit card. This will allow for a lower interest rate based the parent’s credit score while monthly payments are made on the loan. The child will establish a positive credit history regardless of who actually makes the payments.

Another option is to obtain a CD secured loan with monthly payments. CD loans have optional terms and lower rates than other types of loans.

How do I rebuild my credit score after negative credit has been reported?

It can be difficult to rebuild credit once it has been lowered. One of the most important things to remember is that all accounts in collection should be paid or removed (if an error has been made) from bureau reports. Otherwise, your credit score will not improve to the maximum degree.

Once all negative accounts have been corrected, you can rebuild your credit in the ways mentioned above. It is important to make timely payments and not allow accounts to become 30 days past due. Remember, if your credit has been impacted negatively, you can use the experience as a chance to grow and increase your financial knowledge.

We encourage you to take time to talk with your banker to develop a plan to build your credit, rebuild your credit, or just maintain good credit. For our bankers, helping others set financial goals and determining individual plans for reaching them is a big part of how we can help our customers Spend Life Wisely!

By First United Bank