Building Credit: How Banks Can Help You Improve Your Score

Starting Your Credit Journey: How to Build Your Credit

Building credit for the first time can seem like an intimidating task, especially if you’ve never had a credit account before. However, establishing a solid credit history is essential for many financial milestones—whether you’re applying for a credit card, loan, or mortgage. At First Bank and Trust Company, we understand the challenges and are here to help you start building your credit in the right way.

Why Building Credit is Important

A solid credit score opens doors to better financial opportunities. Lenders use your credit score to gauge your reliability in repaying borrowed money. A good credit score can help you secure lower interest rates on loans, credit cards, and even rental agreements. On the other hand, a poor or nonexistent credit score can limit your options and make it harder to obtain financing in the future.

Steps to Establishing Credit

When you're just starting out, there are several ways to begin building your credit history. Here’s how:

1. Credit Cards: If you’re new to credit, starting with a credit card is a good way to build your credit history. By using your secured card responsibly—making purchases and paying the balance on time—you can begin to build a positive credit history.

Tip from First Bank and Trust Company: Make small, manageable purchases and always pay the balance in full to avoid paying interest. Over time, you may qualify for an unsecured card.

2. Be an Authorized User: If you have a trusted friend or family member with a strong credit history, ask if they can add you as an authorized user on their credit card. This allows you to benefit from their established payment history and helps build your own credit score.
3. Use a Credit-Builder Loan: Some banks, including First Bank and Trust Company, offer credit-builder loans designed specifically for individuals looking to establish credit. These loans work by allowing you to borrow a small amount of money, which you then repay over time. This repayment activity is reported to the credit bureaus, helping you build your credit history.
4. Make Timely Payments: As you begin to use credit, it’s crucial to make your payments on time. Your payment history is the most significant factor in your credit score, so setting up automatic payments or reminders will help ensure that you never miss a due date.
5. Keep Your Credit Utilization Low: Credit utilization refers to the percentage of your available credit that you're using. Keeping this ratio below 30% is important for building a healthy credit score. For example, if you have a $1,000 credit limit, try not to carry a balance higher than $300.

Steps to Track and Improve Your Credit Score 

At First Bank and Trust Company, we want to help you stay on top of your credit-building journey. Our Credit Score tool is a free resource available to all of our customers, offering a simple way to track your progress. Here's how it can help you:

1. Easily Monitor Your Credit Score: Track your credit score over time to see how your efforts to build credit are paying off.
2. View Your Credit Report: By regularly checking your credit report, you can quickly spot areas for improvement, such as delinquent payments, credit inquiries, or any errors, and take necessary actions.
3. Set and Track Goals: Receive tailored tips and advice on improving your score and set specific goals. Whether it’s reducing your credit utilization or increasing the number of on-time payments, you can monitor your progress and stay motivated as you work toward achieving your financial goals.
4. Credit Simulator: Want to see how certain actions might affect your credit score? Credit Score features a simulator that lets you explore different scenarios. You can see what could happen if you were to apply for a new loan, open a new credit card, or make on-time payments for several months. It’s a great way to understand how certain financial decisions impact your credit.

Building credit from scratch may feel daunting, but with the right tools, knowledge, and support, you can confidently take control of your financial future. By leveraging the resources available through Credit Score, you can build a strong credit foundation that will benefit you for years to come. Access it anytime through mobile and online banking to start your journey today.