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Credit, what is it and how do you build it?

Posted by North Eastern Group Realty on February 19, 2019
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Credit is a tricky thing, most people are too scared to build credit, because having bad credit is probably the worst thing you could experience. Credit is s scary thing, especially when you’re new to the whole adulting thing as well.

What is credit anyways? well, Credit is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately, but promises either to repay or return those resources at a later date. so basically, you get a credit card and put a certain amount of money on it, then at the end of the month you pay back however much money you spent.

Okay, so, how do you gain credit?

Gaining credit is easy, you can gain it by taking out a car loan, house loan, or by getting a credit card. Those are the three main and easiest ways to build credit. Say you need to take out a car loan, you call your bank and send in your most recent pay stubs from your job. the banker will tell you what you’re approved up to. Then, with how much you use you pay off a certain amount every month, and by the time you pay it off if you pay it every month, you’re in good credit.

  • Excellent Credit: 750+
  • Good Credit:700-749
  • Fair Credit:650-699
  • Poor Credit:600-649
  • Bad Credit: below 600

Now, if your credit is bad, poor, or fair and you want to improve it, here are some tips to help you raise your credit.

  1. Pay Your Bills on Time

When lenders review your credit report and request your credit score, they want to know how reliably you pay your bills.

You can improve your credit score by paying all your bills on time, including auto loans, student loans, your rent, utilities, phone bills, etc. This process takes time, but its worth it.

2. Pay off Debt and Keep Balances Low on Credit Cards and Other Revolving Credit

The credit utilization ratio is another key number in credit score calculations. It is calculated by adding all your credit card balances and dividing that amount by your total credit limit.

Lenders typically like to see low ratios of 30% or less, and people with the best credit scores often have very low credit utilization ratios. A low credit utilization ratio tells lenders you haven’t maxed out your credit cards and probably know how to manage credit well.

3.  Don’t Close Unused Credit Cards

Keeping unused credit cards open—as long as they don’t have annual fees—is a smart strategy, because closing an account may increase your credit utilization ratio. Owing the same amount but having fewer open accounts may lower your credit scores.

These are just a few of many different ways to improve or start building credit. At North Eastern Group Realty , we are prepared to assist our clients with their significant Fort Wayne real estate decisions. Our Corporate commitment is to provide real knowledge, proven experience and professional, quality service. To search all Fort Wayne homes for sale or find a Fort Wayne realtor, visit our website at

North Eastern Group Realty is Fort Wayne’s largest independent real estate company located at 10808 La Cabreah Lane, Fort Wayne, IN 46845

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