According to the most recent market statistics, the average credit score in the United States ranges from 660 to 720. While the users who are on the higher end of the spectrum are in good standing, that average indicates that there are some underlying issues with how Americans spend money. The fact that Americans owe more than a trillion dollars’ worth of credit card debt further proves this.

Given the problems with establishing a solid credit history, it is quite clear that most buyers could benefit from learning some basic strategies that perpetuate good spending habits. This is especially true when it comes to beginners who may not have the necessary experience with growing or maintaining their credit score.

Building credit

So, what are some of the most useful strategies that can help them?

Do Not Apply for Every Credit Opportunity

While someone who does not have a lengthy credit history may need to open multiple accounts, they must avoid applying for everything that becomes available. In other words, signing up for as many credit card offers as possible will not help one grow their credit. On the contrary, it will cause it to plummet. The reason why is that the odds of getting approved on every single application are nonexistent.

So, whenever the financial institution declines the candidate, their credit report will include a credit inquiry. Even though these do not have a major impact on the standing and go away after a while, they will still drop one’s score in the short term.

Try to Spend Consistently

The most common myth about credit building is that not using any part of the credit line will help the user appear more reliable. In reality, however, this is about as useful as using the entirety of the allowed amount. Bureaus may even go as far as deleting certain lines of credit that have not been used for an extended period.

A much smarter approach is to focus on consistent spending. For instance, instead of avoiding the use of the credit line, people should try to use under 30% of the maximum limit each month. Doing so will showcase a consistent spending pattern that is easily predicted by the lender. They will accordingly be considered as low-risk users who the banks can rely on.

Do Not Miss Any Payments

According to a financial company that works with users seeking new credit lines, GuaranteedCreditGroup, making timely payment is crucial. In the case of credit cards, that means paying at least the minimum amount that is due every month. When it comes to loans, however, it means that every installment should be covered long before the periodic deadline.

Given that the bureaus have very little flexibility in this area, anyone who fails to maintain a perfect percentage of timely payments could see their score plummet.

How to fix your credit score?

Become an Authorized User for Reliable Spenders

Albeit a relatively unfamiliar technique, there is probably no faster way to see your credit score rise than to become someone’s authorized user. For the venture to work, however, that person will need to have an outstanding credit history with a perfect percentage of on-time payments.

To better understand the concept, consider a hypothetical scenario with John and Mark. If John decides to approve Mark as his authorized user, John’s entire credit history for the accounts in question will transfer to Mark. Therefore, if John has an impeccable track record, Mark will be able to benefit from it as if it was his own spending history.

Seek Secured Loans and Credit Lines

GuaranteedCreditGroup also advises any beginner credit builder who is struggling to get approved to apply for secured loans or credit cards. Doing so usually translates to a much higher chance of getting access to a credit line that can be used to improve their spending history. Unfortunately, this route requires one to invest as secured accounts need to have some type of collateral.

The best example would be secured credit cards where buyers must make a payment in the amount of the credit line that they are seeking. For instance, if someone pays $500 for this type of account, they will now have a credit card where they can put up to $500. After about a year of consistent spending, most banks will refund the aforementioned amount. That means that the account will convert from a secured into an unsecured credit line.

Ultimately, the smartest technique that beginners should employ when building their credit is a careful analysis of each purchase. In translation, unless something is necessary, the buyer should avoid paying for it. Doing so will help them develop important habits that they will be able to use for the rest of their life.