Picture this: You get an email notification that your credit card bill is almost due. You acknowledge the reminder and swiftly move it to trash. A couple of days later, you get another saying that you need to make a payment tomorrow. Any reasonable person would simply pay it off then and there, or set a reminder for the next morning so they know to take care of it. But not you. You let the bill sit there, unpaid, until it’s a month past due and you’re hit with added interest.
Well, I’m not proud to admit I’ve been in that exact predicament before, which resulted in a lowered credit score, a significant factor in one’s financial health — and all because of my own laziness.
When it comes to personal finances, your credit score carries a lot of weight. “Some people believe debt in general and credit cards in particular are evil and to be avoided at all cost,” explains Thomas Murphy, Texas-based certified financial planner and CEO of Murphy & Sylvest. “Having no credit history, however, has the same adverse effect as bad credit. Getting an apartment, insurance and, in some cases, a job are all more difficult without a good credit score.”
Ultimately, according to Equifax, with a credit rating scale of 300 to 850, you should be shooting for a score of 700 and higher. The closer it is to 850, the better. In order to get and maintain a great score, you’ll need to have great habits in place — which sounds easier said than done if you’re a natural slacker.
But creating a stellar track record with creditors doesn’t have to be laborious. And if you don’t have any credit history whatsoever, there are a number of options to build one from scratch. Below are a few simple tactics you can use to shape up your standing with credit reporting bureaus and future lenders.
1. Get a secured credit card
One of the most common ways to start establishing credit is to apply for a secured credit card. Instead of relying on a solid credit history, these cards allow you to put up a security deposit as collateral. The amount you put down will also act as your credit limit, and you’ll receive the deposit back when you close the account. Keep in mind that while many card issuers are more than willing to approve secured credit cards for people with no credit, your interest rate will likely be on the higher end and your credit line may be low.
2. Become an authorized user on a credit card
If the thought of getting your own credit card seems a bit intimidating, ask a parent or a trusted friend or family member with healthy financial habits if you can become an authorized user on theirs. If they have a history of consistently paying their bills on time, it may have a positive impact on your credit, even if you don’t personally use the card.
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3. Always pay your bills on time
The easiest way to raise your credit is to pay your bills in a timely manner, preferably earlier than their due dates. If you’re a forgetful person, set reminders and mark due dates on a calendar or physical planner (or both) for when bills are due so you don’t forget about them. You can even try using an accountability buddy to keep you on track for each monthly payment.
4. Set up monthly auto payments
If you can afford to do so, setting up auto payments for all of your major bills is a smart way to ensure you’re paying them on time every single month. When you put your payments on autopilot, you don’t have to worry about manually taking care of them or risk forgetting about a statement. You can generally sign up for automatic bill pay through your bank, or even on your individual utility accounts.
5. Use your credit cards sparingly
One popular but important tip for getting a good credit score is to use as little of your credit line as possible — i.e. keep your credit utilization rate low. A good rule of thumb is to never use more than 30% of the credit you have available to you at any given time. When you use your credit cards sparingly, you can make sure you can always afford to pay back what you owe. This can positively impact your credit score, as it signals to lenders that you’re more likely to pay back off your balance.
6. Pay off your balances in full
Contrary to what many believe, you absolutely should not consistently carry over a credit card balance from month to month in order to build credit. It’s actually advisable to pay off your bills completely before the end of each billing cycle so you don’t accrue interest and pay unnecessary money to your creditors.
At the end of the day, it’s far easier to damage your credit than it is to salvage it. That’s just one of the harsh realities of personal finance, and one you should keep in mind whenever you feel tempted to swipe your credit card for a frivolous purchase out of your budget.
Having good credit, though, doesn’t really require much work on your part. Figure out how to make sure you pay your bills on time and utilize the above tips, and you’ll be on your way to credit score success — no matter how lazy you are.
*CORRECTION* (Dec. 3, 2018, 10:23 pm ET): An earlier version of this article misstated the length of the time before a missed payment triggers a lower credit score. It is a month, not a week. In addition, a suggestion to round up credit card payments to the nearest dollar was removed; carrying a small positive balance isn’t an effective method to improve a credit score.
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