The FICO credit score—one of the most feared numbers. Some parents explain credit (or at least to their understanding) and other parents may never mention it, but this is not a number to be uneducated about. FICO is an analysis company which calculates how big of a credit line risk you are (worthiness of loans, credit cards, etc.). FICO is one of the most used companies by some major names that we all know, like: Sprint, Wal-Mart, BMW, and more. One of the biggest questions when young people make that transition to adults is "How do I build a credit score?" This can become a huge part of your life. You will need a credit rating if you want to lease/buy a car, buy a house, take out a loan, and now even cell phone companies are checking your credit. So if you have no credit or very low credit, here are things you can do to build your credit.
Store Credit Card. One of the easiest credit cards to obtain. Most mall stores have a form of a credit card that you can use. When using this credit card, you must never overload it. You set a maximum price that you can spend (the money should already be in your bank account) and that is all you spend. When I got my first store credit card I would never spend more than $20. When you do use this card, you must pay it off soon as you get your bill. Doing this will start to build your credit, or result in the credit score you have improving.
Bank Account. You cannot do a whole lot with this area, but there is one major component that you must pay attention to because it is one of the largest variables within your credit score. Your bank account is used in your FICO credit score in order to determine if you are good at balancing your own money, so you can be evaluated on holding others' money. The amount in your account does not matter, it's over drafting. If you overdraft regularly, that means you are not able to handle your own money, let alone bank loans. This lowers your score each time you overdraft.
Student Credit Cards. These credit cards are for college students. They can actually have many benefits like cash back and point systems. You can find many different types of student credit cards and most credit card companies and some banks normally offer some form of student credit cards (most banks offer student bank accounts, too). If you're a college student, you should try for a student credit card before a retail one. They may be more beneficial than a store card. Just remember, unless the money is in your bank account don't use it.
Social Media. This is a simple thing to do, along with being mostly aimed at college students, but also applies to everyone. FICO has started (or will start) checking your social media accounts for words like "wasted" to see if you're a responsible person. Now, I know this is sounds extremely unfair, but they only look for extreme cases.
Bills. Lastly, bills can be an important part of building and maintaining your credit score. If you pay all of your bills on time, then you are more likely to have a better score. Bills can take a huge toll on your score if you are late many times or just plain don't pay.
Things to also know: Along with everything that is important above there are a few things that you will still need to know.
1. Don't apply to too many credit lines. By doing this, you can risk not getting approved for something important.
2. Check interest rates of any loans, credit cards, or anything credit lines you may apply to, because if it is too high and you end up having to pay excess interest, you may not be able to pay everything back resulting in your own credit score taking a hit.
3. There are two different ways companies check your credit score: hard check and soft check. A hard check will lower your score every time it is used to check. When applying to a credit line, see what type of check they do. Soft checks are the best way to have your credit checked. It will not hurt your score in any way. Some credit cards will report your credit score with every bill, those are typically soft checks while some loans do hard checks which result in lowering your score.
4. Credit score range estimations:
-650 to 699 Good
-700 to 759 Great
-760 to 850 Perfect
If you still have not had all of your questions answered you can refer to FICO.com/fico-score from which most of this information has been obtained from.
