We recommend keeping your credit utilization below 30% of your available card limit. Keeping a low utilization is better for your credit score because it shows you can manage your spending responsibly. Also, be sure to pay the monthly balance in full to avoid paying interest on your statement balance. If you spend within your means, keep your utilization low, and make all of your scheduled payments, you will be on your way to establishing good credit.

Take out a loan with a co-borrower

If you have poor credit or no credit, a lender may allow you to use a co-borrower to take out a loan. When using a co-borrower, you are agreeing that both parties are responsible for paying the balance on the money borrowed. Late payments will not only affect your credit score but also the co-borrowers. However, if you need to establish credit and have someone who is capable and willing to help, a co-borrower is an option to consider.

Be sure to pay your debt on time

Payment history and the ability to pay off your existing debt are the most important factors in determining your credit score. Be sure to make monthly payments on time and in full to build your credit. Paying off a loan balance proves to a lender that you are able to pay your debt which will improve borrowing terms on future loans.

It takes time to establish good credit but the process can be simple if you know where to get started Be sure to spend responsibly and within your means. Every payment made on time is another step toward building a solid credit score. Subscribe below for more Straight Talk Financial Insights with Skowhegan Savings Bank.