Tips to Build Your Credit to Get Credit Approved for Any Type of Credit
Eventually, everyone will come face to face with their credit. You’ll want to take out a loan or apply for a mortgage. Sometimes it can be as simple as trying to get a cell phone. If you’ve never checked your credit history before, you may have a problem. If you’ve only used cash up until this point, you’ll need to build your credit. Since you don’t have a decent credit history, there might be negative consequences. You may be subject to a several hundred dollar deposit just to open an account. You can wait and build your credit, and get credit approved. This article will tell you how.
Check Your Credit
The absolute first thing you do is check your FICO credit score. You have to know exactly where you stand to start building. Three credit bureaus report your payment history, and this helps to build your score. You want your credit score to be between 670 and 800 or up. The more on time payments and different account types you have, the better off you are. You can pull your credit score each year for free to check it. Your FICO score is the one most business’s check when you apply for credit or a loan.
Important Points Get Credit Approved and Build a Strong Credit History
Age of Accounts
Your credit score will go up by the age of your credit history and responsible credit use. The older it is, the better it is for you. This is especially true if you’ve opened a few new accounts recently.
Keep your credit utilization lower than 30 percent of your available credit limit. If your limit is $500, keep it below $150 to stay lower than the 30 percent mark. If you use more, pay it down before the credit bureaus get the report.
The most important part of your credit rating is your payment history. Making your monthly payments on time will make your score rise. If you’re late, it’ll drop your score and look unfavorable to lenders.
You want more than one account type or credit mix on your credit history. It makes you easier to score if you have a car loan, mortgage, and a credit card.
Pointers to Build Your Credit for the First Time
If you have no or a slim credit history, it’ll be slightly more challenging to build it properly. You can apply for a secured credit card, and use it responsibly for six to twelve months. This type of card will usually approve anyone. You could also ask someone with good credit to add you as an authorized user. If they do, you might not even have to use it to get a credit boost. Simply being added on will do this for you. Finally, you can ask for someone with good credit to co-sign for you. This may be harder to do because they’ll be liable if you fail to pay. Also, check with the lender to see if they allow co-signers as some don’t allow this.
Popular Ways to Build Credit to Get Credit Approved
There are several popular ways you can build or rebuild your credit. The key to any of these is a strong history of on-time payments. However, there are several things that you can do to build your credit that you would be paying anyway. You just have to make sure that they report to the credit bureaus.
7 Ways to Build Good Credit and Get Credit Approved For any Type of Credit
Credit Builder Loan
You deposit a small loan amount into a secured savings account and make payments on it. Once you’ve paid the original deposit amount, you’ll get your money back. Make on-time payments, and it’ll reflect positively on your credit. If it’s possible, go through the Credit Union for this loan. Except for SelfLender, these lenders tend to be local and give better service.
Your favorite store may offer a store credit card. These cards also report to the credit bureaus, and they act like a credit card. You borrow money to purchase an in-store item, and you pay it back.
Some states automatically report your rent payments. However, if they don’t do this automatically, you can be missing out. You can request that your landlord reports this payment, or you can report it yourself. You will need your landlord’s cooperation with this, and they’ll have to help you.
Secured Credit Cards
Secured credit cards are for people with slim or no credit. You pay a deposit, and this is your line of credit. Once you make so many on-time payments, this credit limit can go up. You should only use these until you can afford to get a regular card.
Student Credit Cards
If you’re a college student, many lenders offer student credit cards designed for people just starting out. You’ll need proof of employment, and possibly a co-signer.
If you have student loans, on-time payments will help to build your credit. They’ll also add variety to your credit history. You won’t need a co-signer, and they’re Federally insured.
You usually pay utility bills each month. You can call and request that your provider reports your payments to the credit bureaus. As long as you’re paying on time, this will help your credit.
If you use these options, you should be able to build your credit fairly easily and quickly. Once you reach the 680 and up score, you should qualify for a mortage or larger loan. However, the closer your score is to 680, the higher your interest rates will be. Lenders are ideally looking for a score of 700 and up. If you keep working at it, you’ll eventually get the to score you want. This will allow you to easily qualify for a mortgage or loan when you need it.