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poopshirt1

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Building Credit
I'm 19 and i want to build my credit, i have a credit card and a car payment what is another small thing i could do to help? And why is it bad to almost reach your credit card limit?

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Your FICO is an indicator of your credit worthiness, or how well you use the credit you qualify for. It's bad to almost reach your limit because it's an indicator of instability. Using a high amount shows that you might live above your means and carrying a high balance shows that you might not be able to pay off the amount you've borrowed. It's a risk factor. It's bad to carry a 0% utilization as well, because FICO, some argue, is fueled by the lending industry and the lending industry makes $ off of interest accrued on balances. Carrying under 20% will show lenders that you use credit but that you're responsible with it.
 

Here are some general things you can do to build/repair credit. The #1 thing you can do in your situation, is to continue to pay your bills on time every month for at least the minimum. And work towards paying down the amount you've charged to your card.

Consistently pay your bills as agreed upon every month. Make sure you're NEVER late. Change your billing dates if they currently hit at inconvenient times of the month.

-Pay down your revolving balances so you're at <20% overall (add ALL of your balances together and calculate 20%. This is your goal balance to carry. You can carry $0 balances on all cards but 1 with 20% or les on it. Or you can spread the 20% across all cards).

-Review your credit reports from all three bureaus (www.freecreditreport.com will give you one from each every year). Make sure there are no errors or inconsistencies and contact the bureaus individually to dispute errors.

-Do not apply for new credit cards or lines of credit (car loans, cell phones, mortgages, anything that requires an inquiry) if you already have cards. If you have no cards, then consider opening a low interest card and using it occasionally. Keep the balance below 20% and pay it on time every month.

-Do not close any cards once the balance is $0, or if you do close cards, leave the one with the highest limit and the oldest one

-Review your accounts in collections section, if they're newer (not close to 7 years old), can you pay the debt? If so, contact the creditor and ask for a debt verification letter. If the debt is yours, ask for a payment plan and ask to have them remove the derogatory mark after.

-Give it time. While you can do major damage to your score in a short amount of time, it takes a lot longer to fix it.

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