What are the Best Ways to Establish Credit?
Your credit score is a small number that can have an enormous impact on your life. From the cars that you drive to the homes that you own, your credit history can open - and close - many doors to opportunity that greatly affect your quality of life. That's why so many are on the hunt for the best way to establish credit. The good news: It's easier than you think! In this guide, we'll walk you through some of the steps that you can take to boost your credit score. With a little research and hard work, your financial future will be brighter than ever!
While some people jump right into credit card applications, it's wise to start with a secured credit card to safely build up your credit. Just what exactly is a secured credit card? It's a credit card that is backed by a cash deposit, so it's considered very low risk for both you and the lender. While secured credit cards are usually not a long term solution, they are terrific tools to build your credit in the short term. Once you've established yourself as a responsible cardholder, you can get a traditional credit card much more easily. Consider researching different secured cards online to make sure you choose a reputable company with low annual fees. There are many different companies to explore.
Additionally, you have a few other avenues to boost your credit score. Credit-builder loans were designed specifically to help new customers build up their credit, so you could check into your credit union or bank to see if this service is offered. If you need extra funds to get your account started, consider services like cash advances to get the ball rolling. You could also pair up with someone who will act as a co-signer or will give you authorized access on their credit card. Just be sure to talk openly and honestly about the terms of the partnership before you sign anything!
Now that you have your foot in the door, it's time to put your best face forward! It takes dedication to establish your credit history, so stay focused over the next six months. Here are some tips to help you build your reputation with lenders:
- Get into the habit of paying your bills - all bills - on time. Not only are collection agencies a hassle, but they also put a major blemish on your account.
- Don't go crazy with bank accounts and credit cards. Having a few accounts for a longer period of time looks better than opening tons of new accounts.
- Check your credit score for free once per year. This helps you catch any potential mistakes that may pop up.