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Restoring Your Credit: 5 Best-Practices for Building Credit (And Salvaging Your Score)

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Despite people’s best efforts, many check their credit score to find a number much lower than expected. There are numerous reasons your credit score could take a hit, from missed payments to new loan applications to unexpected life events leading to bankruptcy. Salvaging a damaged credit score can be challenging and overwhelming, especially when your financial health is on the line.

However, it’s critical to boost your score as much as possible. A high ranking can help you snag lower interest rates for loans and credit cards, increase your chances of pre-approval on big-ticket purchases, and up your chances of rental approval and lowered insurance costs.

For those entering the housing market in Tampa Bay, be prepared for buyers to expect rock-solid credit scores to counteract the seller’s market currently thriving in the Bay area. In the wake of the pandemic, many housing markets transitioned to a seller’s market, raising housing prices significantly. Maintaining a high credit score can give you a leg up in the negotiating process and put you ahead in a competitive market.

If you, like countless others, are struggling to repair a less-than-ideal score, review the best practices for building credit and set yourself up for future success.

Choose your credit card wisely

To build up your score, you must first have open lines of credit. For those dipping their toes into the world of credit reports, loans, and interest rates, a low-limit card is a great way to start building up credit—as long as you apply caution. Begin the process by choosing a reputable lender with low rates and fees to build your score without damaging dings. Some examples of cards good for boosting credit are the Petal 2 Visa Credit Card, 1fbusa student credit card, and the Discover it® Secured Credit Card, all of which offer low premiums and grace periods, perfect for first-timers.

Make your payments in full

A sure-fire way to increase your score is paying your entire credit card balance every month. Fully paying off your balance each pay period eliminates racked-up late fees and keeps your score happy and healthy. As you continue to pay in full each month, creditors and lenders will see your pattern of good behavior, making it easier to lock-down a low interest, high benefit package in the future.

Monitor your credit reports

It’s always a good idea to keep tabs on your credit score, and you can easily open a free credit reporting account on several different sites, like Credit Karma, Equifax, or Experian. Additionally, monitoring your credit score earlier on in the process of building credit can help guarantee that all of your information is correct and check for possible unknown identity theft.

Keep your credit utilization low

Maxing out your credit card on large purchases when you don’t intend on paying the full balance back that month is a sure way to sink your credit score. If you fall into this trap, your spending habits will signal lenders that you are less likely to pay debts back on time. High utilization rates can hinder your ability to take out bigger loans and gain approval for credit increases. The ideal range for spending is under 30% of your credit limit. To achieve low utilization, use your card for everyday purchases that are easy to pay off each period instead of items with large price tags.

Start working on your credit today

As mentioned before, the only way you can build credit is by having credit. Though it can be intimidating to enter the world of credit scores, interest rates, and loans, you’ll find yourself much closer to all your financial goals if you allow yourself to take advantage of lending opportunities. If you apply smart, responsible spending habits and consistent payments, you’ll have a fantastic credit score in no time.

The bottom line

Although salvaging a credit score can be difficult, tedious work, it’s not impossible. By making payments in full, carefully monitoring score reports, and lowering your utilization rate, you can raise your score and get on your way to financial success.

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