Anyone who has ever had to build or rebuild their credit knows that the process can be tricky. However, if you’re young and don’t have a good score, you have a hard time buying things, getting loans, or even getting a credit card. It’s important to note that being on top of things, keeping track of your score, and paying your bills on time are the keys to keeping your score high. Luckily, there are ways to build your credit the smart way when you’re first starting out. Read on below for a few of those ways to be revealed.
Apply for a Credit Builder Loan
Believe it or not, there are loans out there that are specifically designed for people who are looking to build their credit. A credit builder loan is just what it sounds like, a loan that helps you start getting established in the credit department. The lenders most often report to the three major credit reporting agencies, so if you make your payments on time, it will indeed build your credit. If you would like to apply for a credit builder loan, they are usually offered by community banks or it is possible to find them online at sites like westernshamrock.com.
Apply for a Secured Credit Card
If you are building your credit up from scratch, then applying for a secured credit card is the perfect way to get you heading in the right direction. This card works by giving you a credit limit that is covered by a set deposit you have in the bank. You’ll make this cash deposit upfront and your credit limit will usually be for the amount you deposited. The card can be used like any other card, but it isn’t meant to be used forever. Once you have built up your credit enough to be approved for an unsecured card, then you can close your secured account and your deposit will be returned to you.
Have Someone Cosign for You
It is also possible for you to get a loan or even at times buy a car if you have a cosigner. A cosigner puts his or her name on the line if you default on the payments on whatever they helped you get. That is why it’s so important to talk to your cosigner carefully, letting them know that they will have to pay back whatever you owe if you don’t. Also, if you fail to make payments on time, their credit can be affected as well as yours. This can get tricky when it comes to family and friends, so be careful.
Become an Authorized User
Becoming an authorized user on someone’s else’s unsecured credit card can also be a good way to build your credit. You’ll certainly have more spending room on an unsecured card, and since your name is linked to that account as well, when the card issuer reports to the credit bureaus, your credit is being built also. If you’re good at paying your bills on time, then this is a viable option and one to be explored further.
These are just a few of the top ways that you can build your credit from scratch. However, it’s important to remember that paying your loan and credit cards on time is the key to keep that score high.