Having a good credit score is very important in today’s economy. While those with good credit score will be able to get approved for loans at affordable rates, those with poor scores could have a hard time being approved. For those that either have no credit history, or have a poor credit history, there are several tips and steps that should be followed to help you to build a good credit reputation and score.
Get a Secured Credit Card
While credit cards are often considered a primary reason why people get into a tough credit position, they can also be used as a tool to improve your score. Simply making a few payments on time will help someone with no credit to build their credit scores quickly. Unfortunately, many credit card providers are not willing to offer cards to someone with no or poor credit.
In these situations, a great option would be to open a secured credit card. With a secured credit card you will give the credit card provider a sum of money. The provider will then provide you with a credit limit equal to the amount of the initial deposit. You can then use the credit card in the same form as any other card, including making monthly payments. Within a few months, successful payments will be reported to the credit agencies, which will improve your score.
Credit Builder Loan
Similar to getting a credit card that is secured by cash, you can also get a loan that is secured by cash. A credit builder loan will provide you with the chance to pay off a loan that is 100% secured by your cash. The repayment is identical to the repayment of any other form of installment loan. By successfully making these payments on time, you will continue to build your credit score and history.
One of the hardest parts of building credit is not being approved for a loan to help build your credit. One of the best ways to be approved for a loan is to get a co-signor for the loan. If you have someone with a strong credit history that is willing to co-sign the loan, the lender will base their approval decision on the credit worthiness of the co-signor as well. Once the loan is approved, the status of the loan will be reported on both your credit report and the co-signors report, which could impact your report favorably if you make payments as agreed.
Have All Accounts Reported
Many creditors, including utility companies and landlords, will only report you to the credit agencies if you go into default. Unfortunately, this means that your successful payments are not reported to the creditors. However, by contacting the creditors and the credit bureaus, you can have these accounts added to your reports if you provide the necessary information.