Building Your Credit from Scratch
Here are some tips to help you start building your credit!
Having a strong credit score is essential if you plan to buy a house, get a car, rent an apartment, or even secure a job.
Why is having good credit important?
When it comes to significant purchases like a car or a house, you will likely need a loan unless you can pay the full amount upfront.
That’s why landlords, employers, and even utility companies often check your credit score to assess your trustworthiness.
But don’t stress out; once you start building your credit, your score will improve, leading you to better loan options, lower interest rates, and credit cards with excellent benefits.
Here are some tips to help you start building your credit from scratch.
Try out a secured credit card
Secured credit cards are an excellent way to start if you are just starting out or if you don’t have a credit history yet.
They are easier to obtain than regular credit cards and, if used wisely, can help increase your credit score.
They operate similarly to traditional credit cards: you have a limit and may incur interest, and some even come with rewards!
The major difference is that you need to make a security deposit (usually around $200), which then becomes your credit limit.
As you make timely payments, your card issuer may increase your limit or even upgrade you to a regular card and refund your deposit.
Improve your credit by paying your bills on time
If you aim to enhance your credit score without getting a credit card, you might want to explore options like Experian Boost™.
You can add things like utility bills, phone plans, and streaming services to your credit report.
Usually, these payments do not count towards your credit score, but with Experian Boost™, they do.
It’s an easy way to boost your credit without opening a card.
Discover loans to build credit
Building credit loans are another fantastic option for establishing or improving your credit.
Many credit unions and smaller banks offer them.
You make regular payments on the loan, but instead of receiving the money upfront, you only get the funds once the loan is fully paid off.
The advantage? These payments are reported to credit agencies, helping you establish or improve your credit score.
Become an authorized user
If you’re having trouble getting a card in your name, you can ask a family member with good credit to add you as an authorized user on their card.
You will receive a card in your name, but it will be linked to their account.
The good thing is that your payment history can also help build your credit score, giving you a solid foundation to work with.
Research on credit cards for students
If you are in college, getting a credit card might be easier than you think.
Many banks provide student credit cards, which typically come with lower limits but are perfect for starting to build your credit.
If you feel confident managing both your studies and your payments, it is a great option to start gaining experience with credit.
Avoid requesting multiple credit accounts at the same time
It’s a smart move to refrain from applying for multiple credit accounts simultaneously.
Each application can cause a slight decrease in your credit score, and if you apply for too many within a short period of time, it can seriously affect you.
Furthermore, take some time to do some research so you can find the best credit card that suits your needs before hitting the apply button.
So take your time, do your homework, and you’ll be in excellent shape!
Here are some solid steps to start building your credit. If you found these tips helpful and want to learn more, click below to delve deeper!
