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How to Build Credit

Good credit shows banks and other lenders that you will likely pay off your debts on time. When you have good credit, you can get mortgages, loans and credit cards more easily and at more favorable rates in the future. If you're new to building credit or want to improve your credit score, you have several options. Most methods center on showing banks and other lenders you're reliable and trustworthy.

Best Ways to Build Good Credit

Building good credit takes time and effort but can provide many benefits. Here are a few methods to use to start increasing your credit score.

1. Apply for a Credit Card

Credit cards are like open-ended loans. You take out a loan as you use the card and repay the money through monthly payments. Those without a long credit history may need to select an option like a secured or student credit card. These cards typically have lower initial credit requirements, making them easier to get. Start slow with one card and manage it responsibly to build credit.

2. Correct Credit Report Errors

Your credit report records your past and current debts along with your payment history. Sometimes, these reports fail to reflect particular credit accounts, like local retailers, credit unions and gasoline card companies. Add these accounts to your report to enhance your credit file. 

3. Maintain Good Habits

As you build your credit, maintain it with responsible practices, like staying under 30% of your total limit to keep a low credit utilization ratio. This ratio compares the amount of credit you use to the amount you have. Other good practices include paying on time and limiting credit applications. 

4. Become an Authorized User

When you become an authorized user on another person's credit card — like a parent or spouse — you benefit from their credit history. You also get the chance to build your credit with less responsibility than owning a card. Contact your card issuer to ensure they report information on authorized users to credit bureaus. 

5. Check Your Report

Access free credit reports from TransUnion, Experian or Equifax once a year. Checking these won't lower your credit score, and can give you an idea of your progress and assist you in identifying areas for improvement.

Manage Your Credit Score With Our Help

At First Commonwealth Bank, we aim to build financial confidence by offering guidance and ways to establish credit. Our customers gain access to Credit Score Manager, a tool to determine your credit standing and guide you toward improvement. Learn more about this tool or contact our team online today to discuss credit building.