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Money Management

Building Toward the Ideal Credit Score

Be patient, because it’s going to take a while.

One of those life lessons that they should really be teaching us in grade school is the importance of a good credit score. Unless you happen to be an obscenely wealthy person that can drop massive stacks of cash at a moment’s notice, you’ll probably need to undergo a credit check at some point. Maybe you’re renting an apartment or house, maybe you’re buying a car, or maybe you’re getting a loan; whatever it is, the seller/loaner needs proof that you know how to handle your finances, and in lieu of an itemized ledger, a credit check is the easiest course of action.

So how do you build credit? You use credit cards, of course. Now, personally, I don’t use credit cards to pay for things that I don’t already have the money for. Remember, just because you don’t have to pay right now, that doesn’t mean you won’t have to pay later. The best way to build credit with a credit card is to set aside its use for something you regularly spend money on like gas or groceries. When your credit card rolls over for the month, pay the bill off in full. You specifically need to pay it off in full and after it rolls over; if you pay it off beforehand, it won’t count toward your credit score. If you don’t pay it in full, you’ll have debt, which is antithetical to a good credit score.

It’s good to start building your credit when you’re still young, not just because your financial needs probably aren’t as pressing, but also because building an ideal credit score is probably going to take you at least a couple of years. According to the FICO credit scoring system, which is the most commonly checked one, an ideal credit score falls between 670 to 739. If you’d like to know your credit score, you can use free services like CreditKarma to check. Some formal checking methods may negatively impact your score, but free services won’t hurt you.

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