The First Steps to Financial Freedom: 4 Credit Building Tips You NEED to Know About

Is lack of credit stopping you from qualifying for a personal loan or a new car? You’re not alone. In fact, 1 in 10 Americans qualifies as “credit invisible,” which means they have no credit history.

An empty credit score can hold you back from big, important purchases. Banks, lenders, and even landlords will have a hard time determining your trustworthiness without one. Luckily, there are some tried-and-true credit building tips that can get you on the road to credit success.

Are you ready to get responsible with your credit? Read on to find out easy ways you can boost your credit score!

 

Turn Rent Into Credit

Do you rent an apartment? You could be turning that monthly bill into credit history. Services such as RentKarma, Rock the Score, Rent Reporters, and RentTrack report your rental payments to major credit agencies.

Some of these services carry yearly or monthly fees, and some also require your landlord to participate in verifying your payments. These hurdles are worth it, however, for a guaranteed positive mark on your credit history!

 

Get a Credit Card

It might seem counterintuitive to spend on a credit card in order to build history, but smart credit card use can seriously improve your scores. All credit cards report to the three major credit agencies. Plus, having a card increases your credit mix, which is an important factor in your credit breakdown.

Using credit card companies like Capital One, building credit is easy. There are a variety of cards with different perks and annual fee levels. They even offer a card perfect for students!

 

Become an Authorized User or Co-Signer

If you struggle to get approved for your own card, you might try reaching out to a trusted family member about becoming an authorized user on their credit card. Some cards report to credit agencies on all authorized users, which can give you a boost without going through the application process.

Another option is to get a personal loan with a family member as a co-signer. Your bank can let you know if you’d need a co-signer to qualify. The credit of your co-signer can make you eligible for lending options, but be aware that both parties are equally responsible for paying it back.

 

Be Smart With Your Balance

When you do get a credit card, keep your credit score on the rise by using smart borrowing tactics. Your best bet is to pay your balance in full, every month. If you don’t, keep your credit use below 30% and pay more than the minimum balance each month.

Always pay your bill on time, as payment history will impact your credit score. And don’t close those cards; the longer you have a card, the better your credit score looks. Credit is like a fine wine because it’s worth more as it ages.

 

More Credit Building Tips

Starting from invisible credit status can seem like an impossible uphill climb. However, you might be building more credit than you think. If you’re paying a student loan, a mortgage, or a car payment, you may already be earning positive marks on your credit score.

Try adding one (or all!) of the tips mentioned above to get your credit in the green. With responsible use, these methods are guaranteed to increase your credit score and your borrowing power.

If you need more credit building tips, visit our post about how you can fix bad credit!