Easy Credit: Having credit is necessary in today’s economy. Everyone should try to get their credit as high as they possibly can. Do not listen to what others may say about using credit. Many people do not even own a credit card because of the stigma that comes with owning one. No credit or bad credit is virtually the same thing in this society. Building credit can save consumers a hefty sum of money that they can use to invest in other ventures.
Easiest Ways to Build Credit History
Apply for an Unsecured Credit Card
An unsecured credit card is the perfect way to build credit. Lenders may offer flexible terms and interest rates for first time lenders like college students. Lenders are also likely to give consumers who have no credit history a chance to build their credit with one of their credit cards.
Apply for a Secured Credit Card
A secured credit card may be an option for someone who has a negative credit history. They are responsible for securing the credit card with an amount that is usually equal to their line of credit. For example, if consumers pay a $300 deposit, their credit limit is generally $300 or higher. Lenders may transfer the credit card to one of their unsecured credit cards after a time of excellent payment history from the customers.
Apply for a Department or Gas Charge Card
These credit cards are probably the easiest ones to own. Department stores and gas stores usually have the easiest credit approval process of all credit cards. The credit limits may be low, but it doesn’t matter as long as customers maintain a good credit history. Lenders may even extend the credit limit after a few months of good payment history.
Purchase a Home
Buying a home is an excellent investment. Lenders will lend money to investors who have not yet established credit. Mortgage payments are reported to the credit bureaus each month. Consumers may receive low interest rates and higher loan amounts if they do not currently have a large amount of extended debt.
Rent a Home
Owners may check their potential tenants’ credit to determine if they are creditworthy. They will report the good payment history of their tenants to the credit bureaus upon request. Renters usually receive a great deal when they decide to purchase the home due to their past credit history.
Pay Bills on Time
Payment history accounts for 35% of consumers’ credit history. It is very important that consumers pay their bills on time.
Do Not Pay Off Credit Card Balances Each Month
Paying the full balance on credit cards each month may actually lower credit scores. It is best to use one credit card at a time. For example, consumers with three credit cards may use one credit card for a few months, keep the balance low, pay the credit card off every few months or pay the balance down, and rotate the credit cards out every few month to raise credit scores.
Purchase a Vehicle
Purchasing a vehicle is a wonderful investment that can raise credit scores. New credit accounts for 10% of a credit score.
Open a Joint Account
Opening a joint account with someone with excellent credit may boost credit. A personal loan or car loan is an excellent place to start.
Purchase Investments with Personal Banks
It may be a good idea to purchase CDs or IRAs from personal banks. The money in the CDs and IRAs may provide collateral for a future loan. Banks are more willing to lend money when the customers have collateral to support the loan. Lenders report the credit history to credit agencies so you build your credit in the process.
Make Sure Lenders Report Credit History
When you borrow money from lenders, it is very important that they report your payment history. Payment history accounts for the largest portion of credit scores so consumers must maintain excellent payment history. It may lower credit scores when lenders do not report this information.
Tips to Remember When Building Credit
- Be persistent with lenders until they report information to credit agencies.
- Credit is not built overnight.
- Carry less than 30% balances on credit cards.
- Do not pay credit cards off each month.
- Do not be afraid to apply for credit.
- Pay all bills on time each month.
- Consumers should not apply for more credit than they can repay.
Credit is easy to build and easy to destroy. Consumers should always use their credit responsibly to maintain their creditworthiness. Lenders extend credit to consumers who they believe are worthy of repaying back their debts. Consumers should take all measures to indicate to lenders that they are good choices to extend credit.