From mortgage applications to applications for future jobs, building credit is so important. Because so many life decisions revolve around our credit, it’s imperative to build a good credit score early and consistently. If you don’t have good credit, you may miss out on securing a low-interest rate on a mortgage, personal loan or credit card, and wind up paying more during the term of your loan.

There are many ways to build credit, some being opening a credit card, paying bills on time and receiving credit for rent payments. Credit inquiries could also be used by potential employers. Sometimes they check credit reports for possible red flags, such as delinquencies or accounts that are in collections.

Credit is a basic tool of financial independence. Regardless of marital status, women need credit in their own names to build credit.

In many ways, a good credit score can be like a safety net, providing possible low-interest options to cover emergencies, such as job loss, divorce, death, illness. Of course, it is important to build a bucket of liquid savings for these life events as well. However, without credit, managing through challenging scenarios and even making end meet during rough times can result in financial distress.

Making ourselves aware of how we can build credit is important so we are motivated to build a good score. Let’s walk through some examples:

Pay Bills in Full

• It’s important to pay at least your minimum payment each month, but even better to pay your bill in full. By doing so, lenders see that you are responsible when managing credit, and aren’t buying more that your budget can afford. With that, it is still important to have savings on hands, so it’s okay to carry a balance at times.

Become an Authorized User

• If you don’t want the initial risk of opening your own credit card, become an authorized user on someone else’s account. As an authorized user, you can still to build credit.

 Consider a Co-signer

• This is another option if you are not approved for your own loan. A co-signer can back you until you build the credit history to qualify on your own.

Utilization of Credit Limit

• In other words, referring to percentage of total credit you’re using. For example, if you have $10,000 in approved credit and $2,000 in unpaid charges, your utilization rate is 20%.

Review Account Statements

• It is key to review loan and monthly credit card statements for fraudulent activity. If you see discrepancies, dispute them and contact the lender or card issuer.

Bottom Line

• It’s not time consuming to build credit. You can create a routine, or set up auto pay. Having good credit provides the freedom to qualify for and can help save money and achieve your goals.