Taking action to build good credit can be challenging and oftentimes backfire, yet it is essential to repairing poor credit quickly.

While the fear of not being able to repair bad credit correctly and subsequently having the strategy fire on them, many individuals decide to simply do nothing about their bad credit, resulting in the same bad score staying constant for years.

While you should certainly take the necessary precautions to ensure you build credit in the right manner, be sure not to let the fear of building credit in the wrong way hold you back from trying.

Instead, learn how to build credit in the right manner, which this article is designed to help you do.

1. Make All Payments on Time

First and foremost, the key component to any proper credit building strategy is to make all payments on time.

While it seems obvious, the failure to make payments in a timely manner is the leading cause of bad credit. Therefore, it is crucial to have a realistic plan in place to ensure you are able to make all of the necessary payments on time.

The first step into ensuring you are able to make payments on time is to conduct a complete financial analysis in an effort to gain a better understanding of exactly where you are at the moment financially. Be sure to calculate your post tax income for each month and all of your expenses that you have. Ideally, your income will significantly exceed your expenses, in which case you can focus on paying off debt and credit charge with the additional revenue.

If you don’t make enough to cover both the expenses and debt, however, you may need to seek additional income opportunities, such as a part time job or selling unwanted items around the house. After gaining control of your finances, create a monthly budget and stick to it and stay consistent.

2. Start With One Credit Card

A big mistake that many make when attempting to build their credit score up is they open up several credit cards in an attempt to cheat the system and raise the score much faster.

Not only is it much more difficult to pay off credit charge with this strategy, but it simply doesn’t work. It’s important to remember that building credit takes time and can’t be done faster by opening several cards at once. In many cases, the outcome results in the individual not being able to pay off one or more of the credit cards and their score actually becomes lower as a result.

Instead, start with one of the best credit cards for bad credit and pay it off in a timely manner each month. When you have proven to yourself as well as the credit card company that you can handle making the payments for one card, then you can consider opening up another credit card or switching to a credit card that provides lower interest, better rewards or allows for more freedom.

3. Keep Accounts Open

Although it’s ideal to start with only one credit card when attempting to build credit, it’s important to leave accounts open if they already exist. In other words, don’t drop credit card providers in an effort to cut down to just one card as doing so can result in a drop in your credit score as well.

Instead, try and cut back on the amount you use each card, and be sure to make any and all payments in a timely manner. Doing so more than likely is going to require more extensive budgeting and planning, so be sure to find out how to best utilize multiple accounts at once while ensuring you aren’t late on any payments along the way.

Over time, you can begin to close out accounts very slowly until you are at just one, but never close multiple at once or within a relatively short time frame as doing so can have a negative effect on your credit.

As long as you cut back to one slowly over time and continue making payments in the meantime, your credit score should see an improvement.

4. Check Reports for Errors

Arguably the quickest way to repair bad credit as well as build good credit is to check credit reports for errors. Oftentimes a poor credit score is the result of a mistake that is found on your credit or possibly fraudulent activity committed against you that you weren’t aware of.

As a result, it’s important to constantly stay updated on your credit score and check it constantly. Be sure to look at the credit report in depth for any errors that may exist. In the event you find a stain on your credit that is inaccurate, then be sure to start the dispute process as soon as possible so that the error doesn’t affect your credit score going forward.

By doing so, you may be able to quickly improve your credit score within just a few short months. If your credit score is good at the moment, be sure to continue to check regularly – using trusted websites – in order to ensure there aren’t any mistakes and report any mistakes as soon as they show up.

5. Use Your Card Strategically

Last but not least, be sure to use your credit card strategically when attempting to build good credit. In other words, don’t simply use your card whenever it is convenient for you or when you’re short on cash. Instead, lay out a plan before each month on how and when you plan to use the credit card.

For best use, it’s best to view your credit card as if it were a tool to build good credit and not a true source of payment.

While poor use of a credit card can result in a depleting credit score, using a credit card in the proper, responsible manner can help you raise your credit score and establish trust among loan providers, which is the ultimate goal.

If you have any tips for people trying to build their credit, leave a comment with your thoughts in the section below.