Friday, September 18, 2020

If you don’t have credit or perhaps you’ve made a few financial missteps, it can be difficult figuring out how to build or rebuild it. Luckily, we’ve got your back. There are a few ways you can build your credit and create a better future financial situation for yourself. Believe it or not, inadequate or poor credit can mean you get denied for credit cards, home loans, car loans, and even apartments—so it’s in your best interest to try and create a good credit score.

Keep reading to learn about some simple methods you can rely on to build up your credit:

Acquire a credit-builder or secured loan

As you can imagine, this type of loan is designed to help those with limited credit. The lender in this type of loan holds onto your money until the loan is repaid in full. Your payments are reported to credit bureaus and you can find them at credit unions or community banks.


Another type of loan that can help you build your credit is a secured loan. In this scenario, you put up your own money as collateral.

Curious about what type of loan you might be able to qualify for? Check out this loan calculator to get an idea of what you can expect.

Get a secured credit card

A secured credit card requires a deposit made by you which acts as your line of credit. Depending on the secured credit card you choose, this deposit can be as little as $200 to over $2,000. You can use your secured card for anything you want, including buying groceries, paying your rent, etc. However, it’s important to make payments on or before the due date each month because you risk accruing interest otherwise.

When you close your account, you can get your deposit back. And at that time, you can apply for a regular, unsecured credit card as long as you’ve made all your payments on time.

Have a co-signer

If you have someone you trust and who trusts you, you may want to consider a cosigner. It’s important that the co-signer understand that he or she is on the hook for the full amount of the loan in the case that you default on it for any reason.

Be an authorized user on someone’s account

If you have a significant other or a family member who is willing and able to add you as an authorized user on their account, this is a good method of payment as well. Although this is a legitimate way to build credit, it’s only worth it if the primary user has a good history of making all of their payments on time.

Before you go this route, you’ll need to ensure that the credit card company reports all authorized user activity to the three credit bureaus. If the company doesn’t do that, your use of the card will be in vain.

Get credit for bills

There are certain rent-reporting services you can use like RentTrack that takes your bills and puts it on your credit report, showing history of your on-time payments. With that said, it’s important to note that not every credit bureau takes those kinds of payments into account when it comes to calculating your credit score.

Being financially responsible

When you do finally get a credit card, it’s incredibly important to make responsible payment behavior a regular habit. Another good habit to get into is paying your balance in full each month. That way, you don’t accrue debt unnecessarily. By paying off your balance, you also avoid paying interest which helps keep your debt from snowballing.

Another hot tip is to think about your credit utilization ratio, which is the credit you use in comparison to your total available credit. In most cases, lenders prefer to see around a 30% credit utilization ratio or lower. If you’re maxing out your credit card, you’re using more of your credit and raising your credit utilization.


If you’re trying to build credit, it can be a little confusing figuring out where to start. But by using a secured credit card, becoming an authorized user, getting rent or other bills to show up on your credit report, or by getting a co-signer on a loan, you can make headway on your financial goals.