Best Ways To Build Credit

There are many ways to start building credit; whether you have none or something has damaged it and you’re trying fix it. It’s almost impossible to get through life these days without some sort of credit card. You can’t qualify for a loan without it or in some places even rent a place to live. That’s why it is so important to build good credit. Here are six of the best ways to build credit.

1. Open a checking and savings account. While these types of accounts are not considered credit accounts, they can show up on your credit report. Many lenders and credit agencies view checking and savings accounts as a sign of stability. Your deposits and withdrawals show them how you handle your money and that you have some cash on hand should you need it.
2. Pay your bills on time. One of the best ways to build credit is to pay all of your bills on time. You may think that even just one late payment won’t hurt, but it does; significantly. And don’t be fooled into thinking that it’s just your loans, and credit cards that can hurt or help your credit standing. Any kind of bill that you have from you cell phone bill to your utility bill shows up on your credit report. Once missed or late payment can make the difference. Electronic bill pay can help you make your payments on time
3. Get a secure credit card. These are becoming more popular today among individuals that cannot qualify for a regular credit card. It looks and functions like a regular credit card but the difference is how the money is secured. The money is secured by a deposit you make onto the card. That deposit then becomes your credit balance. Most banks will not issue you a secure credit card unless you have a checking and savings account with them already. Usually the minimum deposit is around $300 and the maximum around $15,000. If it isn’t paid on time then the bank simply withdraws the funds from your account. It is basically a low to no risk for them. The nice thing about secured credit cards is that you can build your credit just like you would with a regular card. Credit bureaus can not differentiate between the two cards unless they are specifically told that you are using a secured credit card. The goal with these is to build up enough credit that you will be able to switch to an unsecured credit card. Make sure that your bank (or whoever you get the card from) signs you up with the major credit bureaus otherwise it will do nothing for your credit.
4. Get store credit. You might want to consider getting a credit card for those stores that you shop at more frequently; such as retail gas stations, and grocery stores. It is not generally hard to qualify for these types of cards and they can really boost your credit if you pay them off each month. Gas and grocery store cards are probably the easiest to pay off because everyone usually budgets for those two things. Try limiting yourself to one card and keep your balance low.
5. Borrow someone else’s credit. Instead of just using your parent’s credit card ask if you can become an authorized joint user so that it can help build your credit score. This is probably the quickest way to build credit, especially if you co-sign with a responsible party. And make sure they report it to the credit bureau otherwise it does nothing for you.
6. Keep your cards at a minimum. Even though you’re trying to build credit that doesn’t’ mean you should go out and get every type of credit card you qualify for. It takes time to build good credit so stick to one or two cards at a time. This can better demonstrate how responsible you are before you start applying for another one. Applying for too many at the same time can actually hurt your credit score.

Some of the best ways to build credit may not be your favorite, but they work. Make sure you do all your homework before you commit to one thing. Pick the strategy that you think will work best for you and go with it.