Credit is what makes our world of finances turn. This is true for everyone from college students all the way up to Fortune 500 companies. Lenders will make decisions about how creditworthy their borrowers are primarily based on credit scores and reports. Because this score is so important for you, here’s a look at a few ways to make it grow.

Small Loans

Loans are a bit different than credit cards. The ones you can get from banks and your local loan agency are known as something called installment credit. That’s because the loan is repaid with interest in monthly installments. Car payments and mortgages are also examples of installment credit. 

If you would like to get one of these at some point in the future, it’s always a good idea to show potential lenders that you have a good history with repaying installment loans. 

Bank Account

One of the basic things to know about credit is that having a bank account can be helpful. Even though credit reports are the ideal method for lenders to decide how creditworthy you are, there are a few other methods of earning trust. Having a bank account is a fantastic way for young adults to prove they have a modicum of financial responsibility even before they try to get their first loan.

Credit Cards

There are a few types of credit cards – secured, retailer, and regular. Secured cards are a great way to dip your toes into the pool of credit. Regular credit cards are also known as unsecured die to the fact that they don’t have any sort of collateral backing up the credit they offer you. 

Secured cards are tied to a type of collateral that’s held in a bank account. Typically, with these cards, your credit limit will be equal to the amount of money you pay to have the card opened. Retail cards are credit cards that can only be used in the stores that issue them – say Macy’s or Kohls.

Credit Report

In the US, our credit reports are handled by three different agencies that report credit and contribute to your FICO score – TransUnion, Equifax, and Experian. If you’ve never actually applied for credit anywhere, you shouldn’t have a report open with these agencies. 

Before you begin to apply for a credit card or get a loan somewhere, check with the bureaus to ensure there aren’t any false reports that have been opened in your name or that everything on your credit report is correct. Remember that it’s always a possibility that someone has stolen your identity after getting a hold of your name and Social Security number.

Pay the Bills

This one is a no brainer. However, it bears mentioning. Credit reports tend to only keep track of money that you’ve borrowed. Traditionally, they don’t keep track of things like whether your rent and utilities are paid on time each month. That means that your history for paying your utilities isn’t used when factoring your FICO score. 

However, that particular score isn’t the only one that borrowers have. There are a few alternative models for scoring credit that use utility bill payments as one of the main factors when it comes to creditworthiness. So, always pay your bills on time.

Basically, the best tips are to pay your bills, check your reports regularly, and build your credit over time. It won’t happen overnight. However, after a few years of making all of your payments and keeping track of your reports, you’ll be well on your way to growing your FICO score so you can reach your financial goals.