Building credit is about using credit. Every hard inquiry into a person’s credit history sets their credit score back a few points. These points can cast people into a lower credit score bracket. Young people especially who have a short credit history can experience this when they apply to buy a new car, rent cars, or open new bank accounts. All of these actions put hard inquiries into credit history. Here are a few more actions that can knock a few points off of credit scores:
Switching cell phone carriers. Not all cellular companies conduct a hard inquiry, but some do, especially when the company thinks a new customer has suspect credit or no credit. Be sure to find out if a new cell phone carrier practices this.
Canceling contracts. Gym memberships especially will sometimes knock points off of credit scores when users back out of them. Customers may save money by canceling an unused membership, but their credit scores can sometimes suffer. Check the fine print for specific terms of cancellation whenever canceling contracts such as gym memberships.
Ignoring traffic tickets. Always pay traffic tickets immediately. If left unpaid, tickets will go to collections agencies, who report to credit bureaus, further injuring credit scores.
One way to avoid these small injuries to credit scores is to use pay day loans for extra cash. Taking out pay day loans and paying them back on time is the best way to build credit. This practice, along with using credit cards wisely is a great way to build credit, especially for young people with a short credit history. If used wisely and within one’s budget, pay day loans are perfect for building credit either for the first time or for recovery of credit scores. Check the specifics of pay day loans always and make sure the balance can be paid.