The cornerstone of your freedom is to have a strong credit history. It gives you the power to spend and negotiate for lower interest rates. However, it is difficult for the young generation to establish a good credit score, especially if finances are part of every facet of your life.
It is difficult for us to establish a credit history that the lenders take seriously. According to WalletHub, more than half of young people struggle with credit history because they don’t have experience and wealth.
So, what happens when people with bad credit history apply for an apartment lease, a car loan, or a mortgage? Their requests are turned down by lenders and banks because they don’t see them as financially responsible.
So how are you supposed to get a new credit card or student loan?
Ways to boost my credit- How to get a 750 plus credit score?
Well, there’s no shortcut to getting a 750 plus credit score. There are ways to bring up your credit score. But all you need is to be consistent and timely.
Keep moving forward to learn about ways to build your credit:
Ensure to have a secured credit card
If you are new to this and building your credit score from scratch, first thing is to get a secured credit card. The deposit amount you make for the credit card is usually the same as your spending limit. However, the maximum and minimum cash you can deposit depends on the type of card.
While some cards do not require a security deposit, others need you to deposit a minimum amount of $200.
However, you can’t use a secured credit score for good. The purpose of a secured credit card is to build a good credit history so you can qualify to get an unsecured card.
As it is temporary, you should always choose a secured card with better benefits and a low annual fee. Moreover, make sure that the company sends credit data to all the 3 bureaus.
Apply for a secured loan to build a credit score
The name, credit-builder loan suggests the exact purpose of it; a secured loan to build your credit. Usually, the money you borrow is held in the lender’s account. However, it is not handed over to you until all the debt is paid.
The history of your payments is reported to the bureaus and hence, you build a good credit score by repaying.
If you already have money in a bank, inquire about a credit-building loan. The interest rate might be higher than other options but it will guarantee an increase in your credit score.
Go for a co-signer
Only a few people know that it is possible to get a secured credit card or loan-building loan by bringing a co-signer. However, the co-signer has to pay the full amount if you have no means to pay. It is a risk for the other person but co-signing adds to increasing your credit score.
Convince someone to sign you as an authorized user
If your friend or a family member is willing to keep you as an authorized user, don’t hesitate to say yes. Agreeing to this position adds the other person’s credit card payment history to your files automatically. However, the primary credit card owner must have a regular history of paying on time. Otherwise, it can affect your credit history negatively.
In addition, being an authorized user reduces the time it takes for the bureau to create a FICO score.
You don’t have to own or use the primary owner’s credit card to increase your credit score. But make sure the company issues the primary user’s credit history to the credit bureau of the authorized user. Otherwise, all your efforts will go in vain.
If you come to an agreement with a primary user, discuss how you will use the card. And, be prepared to pay your share if the deal works out in the long term.
Take help of rent-reporting services
A good credit repair practice is to add credit for the utility bills you pay for. The rent-reporting companies like LevelCredit take the bill you are already paying and add it to your credit history.
This helps to form an image that you are a regular and on-time payer of all the bills. However, not every credit score considers utility payments. But you will build enough credit to get an unsecured credit card for other practices.
Experian Boost credit bureau offers multiple ways to reflect your utility bills on your credit score file. However, the influence of your bills on your credit report is only limited to that of Experian’s.
Maintain good credit-building habits
It takes a long on-time payment history and consistent habits to fix your credit report. For a FICO score, you need one creditor reporting all your credit history and an account that has been active for more than 6 months.
Moreover, the following practices will help you add points to your score:
- Keep the credit utilization minimum
- Pay the bills and other payments on time
- Avoid applying for multiple credit cards
- Keep your credit accounts open and active
Check your credit report frequently
Your credit history or report is evidence of how you have used it in the past. It determines how you handle your credit. Moreover, it is useful to see how your credit-building practices are paid off. Besides, you can watch for errors and file a dispute.
Now that you know about the best practices, get your hands on a secured credit card and start your credit-building journey from scratch.