If you have poor credit or are just starting out, then it can be overwhelming. After all, without being at least satisfactory, it is hard to get loans, start a business, and have emergency funds for life situations. However, if you follow the tips below, you can start building sooner than you thought. So, grab a drink and get ready to take notes:
Get a Secured Card
A secured card is one that you must provide a deposit for upfront. Then, your line will be equal to the deposit. This is not a card for having access to extra money as much as it is for purely for this exercise. Therefore, make sure to make payments on time and don’t incur interest. It would defeat the point. That is not to mention the company could take you deposit as collateral. Also, make sure that the card reports to the major three credit bureaus. This is the only way that your card is going to help you, so, use it to pay normal bills and don’t put more on there than you can afford to pay off right away.
Find a Co-Signer
If you have a friend or family member that is willing to co-sign on your card, you could more likely be granted approval. It can help you gain access to higher amounts of capital as well. However, avoid the temptation to spend more than you should or you could take on more debt than you can handle.
Be an Authorized User
An alternative to having a co-signer is being an authorized user. You can actually use the other person’s card and you will build as if you were the one who took out the loan. However, make sure the card reports to the major bureaus again, because not all of them do.
Pay Your Rent On Time
A slower, but still effective, way to build your credit is to pay your rent on time each month. If your landlord reports this, then you will be able to build a good history of payments. This is something that agencies like to see.
Get a Loan
Some banks will offer a credit building loan. This is a loan that only exists to help you grow your credit score. You take out a loan and pay it back over time. However, the catch is that you don’t get to touch any money from the loan. The bank holds it all. The bank gets to make interest off the loan and you get to build.
Keep Low Utilization
The amount you use should be low in comparison to your overall balance. Don’t spend more than you can afford to pay off each month. This is because you want to maintain a utilization of 30% or below to look good to the bureaus.
Stay on Top of Your Reports
Make sure you are checking your report and score often. It helps you stay on track and catch any errors or issues you need to correct. That way, your score keeps going up virtually every week.