We see many youngsters trying to build their credit when they disqualify for a potential loan without credit history. This can be a taxing experience for those who genuinely make an effort. We would like to list out the best ways to build credit quickly.
Strategies to Start Building your Credit Today
Below highlighted are the 6 strategies to start building your credit today:
Set-off as an Authorized User on a credit card: You can easily become an authorized user for any credit card account. You can easily approach a close friend or relative who is willing to lend help. As an authorized user, the existing accounts history will reflect in your credit report/ score. This can considerably improve your credit score. Ensure & contribute to make the account show in good standing. Avoid getting associated with financially eroded accounts. Any negative blot can spoil your credit report. If the account reflects poor decisions & shows a negative status, you will see a significant negative impact on your scores.
Apply for a Secure Credit Card: A secure works just like a regular credit card. Choose a card intelligently to avoid financial snags. Use your credit card for all the possible purchases everywhere. Make monthly payments & build your credit score gradually. Your deposited back is returned after a good credit score is ready. It’s good to keep your account open until you build your credit up.
Find a co-signer: If you’ve been trying too hard, yet haven’t gotten credit approved. Then, find someone to help you through this. A co-signer is essentially held responsible if the offered loan is defaulted on. It is very difficult to build good credit over years sometimes, so here a co-signer helps. If you don’t find a co-participant, get approved as an authorized user on credit card. This strategy comes handy when nothing else looks working in favour.
Find someone to add you as account owner: This is the easiest strategy to work around however the toughest to find. If a close one is buying/leasing a car, allow them to add you as the main borrower and themselves as the co-signer. This will substantially help to build credit as the payments will be timely made. This is good step for parents to help their children get a boost in their financial life. This is also applicable to married couples where of them has a comparatively good credit score.
Also read: Have Low Credit Score? Top 5 ways to Fix It
Get a credit builder loan: This is not as much existent in our country as internationally. A credit builder loan is available to people who are financially independent but need good credit scores. These are typically offered by local lenders carrying goodwill relationship. If your savings account is in good condition and you have a steady job, then you can avail a credit builder loan. A regular credit builder loan starts when the bank sets up a savings account to deposit funds. You’re disallowed to use the funds until the last payment. Every payment reflects to the credit bureaus. Alternatively, you can maintain a fixed savings balance & keep in intact till your loan is fully repaid. These loans don’t stop your loan usage at all.
Get a student credit card without credit score: A student credit card can be used exclusively by college students with no credit history. There are too many online websites where you can get student credit cards at low interest & zero fees. As a newbie, you should start with a basic credit card.!
General ways to build credit scores
- After you reach a good credit history, retain good credit habits.
- Regularly check your credit scores and credit history.
- Download the Home Credit App & keep track of your score for any activity on your credit report
- Pay all your bills on time.
- Keep your accounts open for as long as possible
Payment history has a gigantic influence on your credit scores. Keep credit card balances low. Your credit utilization ratio accounts for 30% of your credit score, the lower the balances are, the higher your credit score will be. Have a mix of credit account types. You account mix makes up 10% of your credit score. Having a variety of credit types, such as credit cards, installment loans, auto loans, etc. shows diversity in your credit profile thus increasing your credit score.