4 Tips for Building Your Credit Score
What are the top tips for building your credit score?
What do you need credit for?
Who cares about credit?
A study by The Consumer Financial Protection Bureau in 2015 found that nearly 26 million Americans have little or no credit tied to their names. Otherwise referred to as “Credit Invisibles”, these individuals may come to experience more financial hardships, burdens, and loans they cannot recover as quickly from. In this article, we will divulge some of the best tips to help you build your credit score today.
The one main concept to remember is that building credit can be a long-term project. Much like Rome, your credit will not be built a day. Think of your credit score as your “trust-level” from credit lenders. The more persistent and consistent you are the more favorable the results will be. Now let’s dive into the four top tips for building your credit score yourself.
4 Tips for Building Your Credit Score
1. Secured Credit Cards
If you are just getting started it may be more difficult to qualify for a decent credit card without being drowned by interest. Most individuals will have an option to open what is called a “secured credit card”. These are typically pre-loaded when the account is opened as the limit is adjusted accordingly over time from the bank. So once you have used this card for several months to a year, you can confidently apply for a traditional credit card.
When started out using a secured credit card it is important that you pay off your balance every month. This is the time that you are proving you can be reliable with making monthly payments so use it wisely. One of the biggest mistakes people tend to make is never to spend more than what you can afford. Just because you have a credit card does not mean you can go to Best Buy and buy a new 70″ TV and just “pay it off later”.
After you get your secured card use it for everything you would typically use your debit card for. There are helpful mobile apps such as Mint that can help track your spending habits and trend so you can make sure you’re never overspending.
2. On-time Auto Loan Payments (Get a Co-Signer)
One of the best ways to build your credit in 2019 is by getting out an auto loan. This is very popular amongst recent college graduates entering the workforce looking to build their credit scores. If you obtain an auto loan that essentially means you are now responsible for monthly payments for an extended period of time. Auto loans are typically 5-year contracts (subject to change by lender/dealership).
Applying for an auto loan can be difficult if you have no credit (or are just starting out). However, you can have a close friend or family member who has a good credit score to co-sign on your loan. Having a co-signer is a safety net for the lender. Meaning if you fail to follow through with your payments on time it will default onto your co-signer. You are far more lately to receive a more respected auto loan and interest rate with having a co-signer with you.
It is imperative that you make sure you pay your monthly payment on time. One of the best things you can do, since interest is “per diem” is to split your payments in half. Pay the first half at the beginning of the month and the rest at the end. This helps mediate some of your interest involved and lessen the blow to your wallet.
3. Paying Back Student Loans
Dreaded student loans… A figure every college graduate cringes when they see. For most this can seem like a hole from which you cannot escape. However, there is a plus side to paying off your student loans. Minus the fact that you are shelling out money, you can always keep in mind that you are also building your credit.
One key point to remember is that you cannot miss payments. 30-days after a missed payment, your credit score will be negatively impacted. These spikes can sometimes take months to years to recover from. In some cases, they will remain on your credit report for up to 7-years.
4. Credit Builder Loans
Although most banks do not offer credit history builder loans these can positively impact your credit score, and quickly. The main purpose of this type of loan is to do as the name states, “build credit”.
The way these loans work is you borrow a small amount from your bank ($500 – $1,000) and promise to repay the amount within a said period of time. Typically these credit builder loans have a deadline payoff date everywhere between 6-12 months. Then the financial institution lending offering you the loan will deposit it into a designated account where it will accrue interest.
After those 6-12 months are completed and you have repaid your loan in full you are entitled to get your money back plus any interest that is earned. So this way you will not only be building your credit but improving upon credit score at the same time. This way you end up making a little chunk of change at the end of it all.
More Tips for Building Your Credit Score: Avoid These Mistakes
Throughout this article, we have discussed the top 4 ways to building credit these days. However, there are several mistakes that are easy to make that you should be aware of. Do not start your credit building journey off on the wrong foot. Here at InternetPrivacy, we strive to offer the most assistance in the industry when it comes to tips and tricks for not only improving your credit score but to improve your personal privacy at the same time. Now let’s discuss the top 3 mistakes you should avoid when working to build your credit in 2019.
Payments that are made 30-days or more after due are reporting onto your credit report. These reports will linger and haunt your credit score for the next 7 years!
If you end up getting approved for a credit card make sure you use it wisely. Just because you are not paying it out of your pocket now doesn’t mean you never will. The more available credit that you use the more you will drag down your credit score.
Avoid Going to Collections
If you do, even bills that aren’t commonly reported to the credit bureaus. This includes hospital bills and utility bills which will also hurt your credit score.
Looking for more tips for building your credit score, protecting your privacy and improving your online reputation? Visit Internet Privacy today or call 866-349-0130 to speak with an Online Privacy Specialist today.