Credit in the financial sense is one of those things that people either love or hate, but despite how you feel about credit, there’s no denying that it’s important. Credit is important because it serves as a gateway to making large purchases like homes and vehicles.

Unless you can pay the entire cost of a house or vehicle on the spot, you’re going to need to borrow money to be paid back in monthly installments. Lenders take a risk when they give people money. What happens if someone doesn’t pay a loan back? So, to minimize this risk, lenders look at your credit score to determine whether you’re someone who has a history of borrowing money and not paying it back or paying it back late.

What Are Things That Can Affect Your Credit?

When you utilize credit, your activity gets reported to three major bureaus: Equifax, Experian and TransUnion. These three credit bureaus track things like missed or late payments, closed accounts and accounts in good standing, all of which can affect your credit score. If you try to get credit in the future, these are the agencies that will provide information to creditors considering your application.

How Can You Build Credit?

No one in life starts out having credit, and having no credit is just as bad as having poor credit in most cases. To get started, you can look for a debit card for building credit. This type of card usually requires you to add funds upfront to act as a security deposit. Using a debit card for building credit, you can borrow a certain amount based on the amount that you have paid.

You can also build credit by making monthly payments on time and avoiding carrying too much debt. As debt builds up, you’re more likely to miss payments or require a lender to make special arrangements. Paying off existing debt early may also help, but making payments on time is crucial.

Disclaimer: The above is not financial advice. If you are concerned about your credit, contact a credit counseling professional to discuss your options.

Author Resource:-

Daniel Stewart writes about student debit cards and taking control of your finances services. You can find his thoughts at college debit card blog.