Building a good credit score has the potential to help save you money and make your financial life much easier. However, many people don’t know where to start when it comes to building their score. Often the best way to boost your score involves tackling the issue from a number of angles. Here are a few ideas to get you started:
Obtain a Credit Card in Your Own Name
A tried-and-tested way of building credit is to obtain a credit card. You’ll find there are a variety of options available to suit a range of situations. If you are just starting out and have never had a credit card before, you can get the ball rolling with a student credit card or secured card. The key thing to remember is that you need to make your minimum payments on time, as credit bureaus will be looking to see that you are able to use your credit card responsibly.
Become an Authorized User On Another Account
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An alternative to having your own credit card is to become an authorized user on a loved one’s account. This tactic requires minimal effort, as the primary cardholder just needs to add you to their account. However, it is important to note that the primary cardholder is liable for the account’s balance. This doesn’t let you off the hook, though, because if the card isn’t used responsibly, it could damage your score. If you don’t have a trusted party that will allow you to piggyback on their account, you could opt to open a tradeline that enables you to pay a fee to be added to a stranger’s account. Be sure to use a reputable broker and check out their tradeline supply company review before committing.
Take Out a Personal Loan
Personal loans also play an important role in helping you build credit. However, qualifying won’t always be easy, especially if you want to find a loan with a decent interest rate. You really should only take out a loan if you actually need it for something that will improve your quality of life, such as a vehicle. The key here is to ensure payments are always made on time, as this will have a positive impact on your credit score.
Use a Credit Builder Loan
If you don’t qualify for a personal loan, the next best thing is to apply for a credit builder loan, which is perfect for beginners or people looking to repair damaged credit scores. The main difference between these and a regular loan is that instead of receiving a lump sum and repaying the lender with interest, the financial institution puts the money into an account and you pay a fixed monthly amount to the lender. Positive payment activity is reported to credit bureaus for the lifetime of the loan.
Building a good credit score should involve a blend of these techniques. Many of these options will also depend on their financial status at the time, but getting started as early as possible is important if you are looking to have a more stable financial life in the future.