Paying Bills on Time to Build a Solid Credit History

Pay bills on time to build a solid credit history. Late payments can negatively impact a credit report. Negative entries in a credit history can result in a diminished credit score and decreased opportunities to get the best loan rates. Paying bills on time is just one of the many factors included in calculating a credit score. Tips to build credit histories include responsible credit card use and understanding how credit scores are used.

Tips to Help Improve Credit Scores

Paying bills on time can help improve a credit score. Credit scores factor in a lot of information including payment delinquency, amounts of credit and credit limit balances. Your credit score will quickly improve with additional positive payment histories in your credit report. In addition to mortgage lenders and credit card companies, other entities now report payment history to the credit bureaus. More and more frequently, utilities companies report account information to the credit reporting agencies. If you aren’t sure, ask the companies you deal with if they report payment history to the credit bureaus.

How Credit Scores and Credit Histories Are Used

Credit scores are used to determine credit worthiness and general fiscal responsibility. Mortgage lenders use credit scores to determine who is eligible for the best loan rates. In addition, credit history is used by hiring companies to determine whether a prospective employee is right for the job. Credit card companies use credit scores to decide what interest rates and promotional periods of interest rates to offer new credit card applicants. A credit history may also be used by landlords, who may require additional security deposits or other fees from people with a poor credit score.

More Tips to Build Your Credit History

A credit report is impacted by a number of factors; paying bills in a timely manner is just one way to build a good credit history. People who frequently have late payments noted in their credit score, or have too many credit cards and lines of credit or have maxed out their lines of credit won’t be eligible for the best credit card and loan rates. Inquiries by lenders, prospective employers, landlords and other interested parties also play a small part in calculating the credit score. Ordering your credit score won’t negatively impact your credit history and can help you find deficiencies and areas for improvement.