Building Credit
Effective ways build your credit
Don’t have a credit history and want to build your credit? This can be tricky since lenders like to see a credit history and good credit score before extending credit. There are ways though to build credit quickly and even boost your score.
Here are 7 effective ways to build credit.
1. Have your Rent Payment added to your Credit Report!
This is an area which a lot of people don’t know is possible but can quickly add substantial positive credit points to your score. There are number of ways to do this, either through a landlord program or on your own with a rent reporting service. Some of these services claim to add as much as 120 points on a credit report and add in historical rent for 4 years for a fee! This is a which those looking to a buy a home should really focus before beginning the process. Your credit score may get you a substantially lower home loan rate.
2. Have your utilities show on your Credit Report.
This is another less known way to add points to your credit. Most utility providers don’t report payment activity to the credit bureaus, which means your utility bills aren’t doing anything to help your credit history or build your credit scores. Utility bill payments can be added to your credit reports, but they are not put there automatically. Like rent, there may be som providers that do report, but the vast majority of utilities will never show unless you engage with a service to do this.
3. Get a Secured Credit Card
If you have having trouble obtaining a credit card, one option is to get a secured credit card. This is a card which requires you have prefunded the card before using. You will be approved up to the amount of the funds you have loaded on the card. The benefit to you is that you will build credit through the use of this secured card. You don’t get the benefit of a line of credit to use but you do gain on the credit score side.
4. Getting a Co-Signer for a loan or credit card
Another option is to have a co-signer on a loan or credit card. You would be listed as the primary with the co-signed guaranteeing the obligation. This of course means that you’ll need to find someone who would agree to be your co-signer and be responsible should you default.
5. Be an Authorized User for someone else
Being an authorized user for another person (most likely a family member) benefits you as their card payment history will benefit your credit report and score. It goes without saying that you’ll want to make sure that person maintains a positive payment history.
6. Get a Secured Loan
Similar to the secured credit card, a secured loan is a product designed to help you build credit while at the same time limiting any risk to the lender. These are often referred to as Credit Builder Loans. You deposit funds with the lender and in turn you make monthly payments up until the end of the loan when the funds will then be returned to you. It is in many ways a forced savings program but you get the benefit of building credit with each payment.
7. Maintain positive credit habits
Lastly, there are positive credit habits you should be having on all of your borrowing. On-time monthly payments are very important. These should really be setup for automatic minimum payments. You can always pay more or pay early but by setting up automatic minimum payments you will ensure that no negative information is reported on you. Do this on all of your credit cards and loans. There are simply too many things that can go wrong. Late payments stay on your credit report for 7 years! That is a crazy long time for something easily managed.
© 2023 Wallet Wisely - All rights reserved.