OMAHA, Neb. (WOWT) -- Whether you are new to credit or trying to build better credit, here are some things that you need to know from Centris Federal Credit Union. Building good credit doesn’t happen overnight. It takes time, typically at least six months of on-time payments. For some banks and credit unions, they may want at least 24 months of on-time payments, especially if you are among the youngest segment of borrowers who may not have a credit file or a thin file because you are just starting out.
Access to credit is important and building credit can be tricky. It you don’t have a credit history or have a damaged history, it may be more difficult to get a loan, credit card, or rent a place to live.
Best practices for building good credit include:
Credit Report and Magnifying Glass
1. Pay your bills on time, 100% of the time. This is not just for your credit cards but every account you have that requires a payment.
2. Limit the number of credit accounts that you open at once. Every time you open a new account, your credit score is impacted and will lower your average account age.
3. Do not open and close accounts regularly. Try to keep your accounts open for as long as possible and remember #2 – limit the number of credit accounts you have. Be selective in where you have credit cards. Keeping credit accounts open helps with the length of payment history and credit utilization and management.
4. Check your credit reports annually to find errors. If you find any discrepancies, contact that credit card company to clear it up.
5. If you carry a balance, do not let it exceed 30% of your credit limit. This percentage applies to all combined credit you have. By keeping your credit utilization low, you help keep your score higher. Remember that utilization is your balance when compared to your limit.
6. Work to establish credit in your name without a co-borrower. If you are under 21 or do not have a credit history or have had bad credit, you may need someone who has good credit to co-sign with you on your credit application. This is fine to do and after you have shown the ability to manage your credit, work to get a loan or credit card in just your name. It will help you in the future as your needs for credit change and mature.
To check your credit score, Centris Federal Credit Union recommends AnnualCreditReport.com. You should never have to enter a credit card to get this sensitive and important information. Remember to check once a year for any errors or discrepancies and report them as soon as possible as they can affect your credit score.