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How long does it take to build a good credit history?

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How long does it take to build a good credit history?

Now we no longer have to go cap in hand to our bank manager for a car loan, the credit score is everything. The idea of being controlled by an algorithm we have little control over may not sit well with everyone but if you know how they work, you have more power than you might think. For now though, let’s tackle the question of building a good credit history.

Without a good credit history, your car loan options will be smaller than usual and the rates you pay will likely be higher. You can access credit with a less than great credit score but you do pay for the privilege. That makes building a good credit score vital.

How much history does credit history need?

The clue is in the title really. Your credit score is based upon your credit history. That means your history of paying bills on time, of using credit and paying it off and all that good stuff. If you have no history, it can take as little as 6 months to begin creating good credit history. If you have a less than perfect credit history, it can take a little longer.

At its core, building a credit history is just a matter of using accessible credit in a responsible way. Whether you’re a first timer or are rebuilding your credit, there are a few easy ways to begin.

Get a credit card

Credit cards are not evil. They are useful mechanisms for getting what you need. There is just one simple rule when using a credit card. Never spend more than you can afford to pay in full at the end of the month.

To begin building a credit history, apply for a credit card and use it. Buy your gas, buy groceries or buy other regular purchases. As long as you pay it off in full at the end of each month, it doesn’t matter what interest rate the card charges as you won’t be paying it. As long as you follow that rule and always pay on time, you should start to see your credit score climb.

Get a contract phone

A lot of us like to have a pay as you go phone for ease of use and for its low running costs. If you are trying to build a credit history, once you have a few months of credit card payments behind you, get a contract phone if you can afford one. This is another mechanism that will contribute towards your credit history. It’s a small one but every little helps.

Make sure you can afford the phone and set the monthly payments to automatic. Over time, with the phone and credit card, you should be generating a positive credit history and your credit score should continue climbing.

Car loan

You could try multiple credit cards but we would suggest your next step is an affordable car loan. You should have enough credit history to be able to access this kind of credit so why not give it a try? As long as you can comfortably afford the repayments and are sure the loan won’t get you into financial trouble, it’s the next best way to improve both your credit history and your overall credit score. Get a few months of successful credit card, phone and car loan payments under your belt and your score should continue climbing until it reaches its maximum!

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