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Building Credit Cred: Build a Positive Payment History

The smartest way to build credit with a credit card is to charge a small amount to the card each month and then pay the bill in full, not just make the minimum payment, every month. By paying the bill in full, you won’t be charged interest, and you’ll be building a positive payment history.

According to FICO, payment history, which accounts for about 35% of the average person’s credit score, also takes into account any bills paid late, including how many are late, how late they are, and the total amount owed. This is also where previous bankruptcy would affect your credit score. Bankruptcy is a condition in which a person or a company is unable to pay their bills and have filed a petition with the court to help them resolve their financial issues. As a result of filing for bankruptcy, debts are often reduced or, in some cases, removed altogether. Bankruptcy may also require that most of an individual’s assets, that is, their belongings, be sold to pay a portion of the debt. There are several types of bankruptcy, and it’s important to note that not all debt can be dealt with through bankruptcy proceedings. Student loans, for example cannot be forgiven or reduced through bankruptcy.

Bankruptcy is a very serious legal proceeding that will have a negative impact on your credit score for up to 10 years. It should be thought of as a last resort when you’re in a dire financial situation in which all other alternatives have been exhausted.