8 Easy Ways to Improve Your Credit Score In 2021

improve credit score

It’s been a difficult time for everyone. But coming into the new year, many have found the past twelve months have landed them with lower credit scores than ever before. This can damage not only your financial reputation, but also your prospects. So, what’s the effect of a high or low credit score, and how can you improve yours? 

Why Is a Good Credit Score Important?

It’s like a digital record of financial viability, which is reflected in a credit score. Purchases made using credit cards and monthly debt repayments boost your score. A low credit score makes borrowing money, securing credit cards with good interest rates, or qualifying for a mortgage difficult. Conversely, maintaining a good credit score can:

  • Increase loan amounts available      
  • Lower interest rates on loans
  • Increase the probability of loan acceptance
  • Provide access to buy now, pay later credit offers

Boosting Your Score Is Easy

Knowing everything about your credit score is important. So, you must check it whenever possible to see where you can give it a boost. Let’s discuss eight easy ways to improve your credit score In 2021.

#1 – Know Your Score with a Free Credit Report

To improve your credit score, you need to know what it is. There’s plenty of companies out there that can give you a free credit report card, such as TransUnion, Equifax, and Experian. Most of these provide paid services to keep on top of changes. If you have the spare income to subscribe, it can significantly help your credit score. Keep reading to find out how.

With companies like Experian, you are entitled to one report free annually. And you may even be eligible for another if you’ve recently been refused a loan or employment based on a poor credit score.

Get Your Free Credit Report Card

#2 – Check If Your Report Is Accurate

Identity theft and credit fraud are rife these days. Once you have your report, take the time to review your accounts and dispute any you know aren’t right. Even if you don’t get lost money back, having false debts removed from your credit report can boost your score.

#3 – Pay Your Bills on Time

Perhaps the most frequent cause of lowered credit scores is late payments. To give your credit a boost, make sure to pay any bills and loan repayments on time. Using direct debits is a reliable way to make sure payments reach their destinations on time. And monthly reminders on your phone or work computer can help if you’d rather not automate your payments.

#4 –  Open a Secured Credit Card

The main benefit to get this card is that you’re more than likely to get approved if you don’t have stellar credit. You’ll need to make a deposit upfront. And they often don’t require a credit check to apply. Another huge benefit is you’re going to build your credit just like any normal credit card would, if the issuer reports to the credit bureaus. When choosing any credit card to help boost your credit, make sure they report to the bureaus before applying. 

Compare Secured Credit Cards

#5 – Get a Credit-Builder Loan

To get a credit-builder loan, you don’t need to have a good credit score. You just need to prove that you have enough income to make the payments. 

You regularly can’t get to the cash until you have completely reimbursed the advance, which implies you can work on your savings and your credit simultaneously.

#6 – Check Your Credit Report for Errors

The first thing to do is to look at your Credit Report. Second, You can get one from each of the major bureaus. You’re entitled to a free copy every 12 months. Once you receive these, pay detailed attention to any errors such as an incorrect address, the spelling of your name, open accounts being reported as closed, outdated information, and many more. Check here for more information.  

#7 – Get a Credit Card, and Request More Credit

Spending credit is the best way to earn better credit. So, look for a credit card that fits your needs. You can use it for predictable expenses you can pay off as soon as you get paid. Simply using the card and paying it off at the start of every month shows you can use credit responsibly, which should allow you to request more credit to use and improve your debt ratio, which also affects your credit score. These things can help boost your credits score effortlessly.

#8 – Patience Is a virtue

Repairing your credit score won’t be fast or without hurdles. Take your time to think through all your financial choices, limit your access to new credit avenues unless they fit into your overall credit goals, and keep on top of payments. It may take months for the results to show, but once they do, it’ll be worth it. Hang in there!

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The post 8 Easy Ways to Improve Your Credit Score In 2021 appeared first on Credit.com.

Source: credit.com

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6. Open a New Credit Account

If you want a nice boost to your credit and you want to help improve your credit utilization ratio, you can consider opening a new credit account. This is especially helpful if you find that your current credit utilization ratio is much too high.

Opening the new account adds to the available credit you have and will show that with the new balance, you are using less. However, this is not a good option if you are already juggling multiple accounts. You may end up hurting your credit instead of helping it if you try to stretch your credit too thin.

7. Open up Negotiations

Have you taken a closer look at the current debt you owe? Have you considered negotiating the debt you have in collections to rebuild your credit? Many collection agencies will be willing to negotiate because they really won’t be losing any money on the debt if you are able to settle for less because they most likely bought the debt account for a minimal price.

It never hurts to open a negotiation to try and settle the debt you have for a smaller and more manageable amount on your credit accounts. If you find that you are unsure about this process, or if you don’t know if it is something you should do, you can always seek the help of a credit counselor to help educate you on the process and offer suggestions as to what you can do otherwise.

8. Become an Authorized User

Another fast way to boost your credit could be to become an authorized user on someone else’s credit account. For this to be a viable and recommended option, you will need to find someone you trust, such as a close friend or relative, that is financially responsible and is willing to do this for you to help improve your credit rating.

As an authorized user on someone else’s account, their account will still show up on your credit report, and their payment history, credit utilization ratio, and credit card balances will become part of your credit history and may award you with a good credit score.  Not all credit card companies report authorized users however, so you will want to make sure that if you do become an authorized user, that the account information will show up on your credit reports.

9. Make On Time Monthly Payments

In addition to paying on your accounts twice a month, you should also make sure to make your payments on time every month. Your payment history makes up approximately 35% of your FICO score.

If you find it hard to remember your due dates, consider placing your accounts on auto pay with reminders so it reminds you that the payment is coming due and it will then automatically make the payment for you.

10. Mix Up Your Credit Choices

Finally, make sure you are mixing up your credit choices instead of focusing on using just your credit cards, for example. Using different types of credit can boost your score fast – even though it wouldn’t be a significant boost.

If you need an appliance, instead of using your credit card, you should consider a small personal loan instead. It shows that you can effectively and responsibly utilize different types of credit.

Fastest Way to Boost Credit After a Bankruptcy

One of the biggest hits to your credit is a bankruptcy and people are often anxious and ready to begin boosting their credit following their bankruptcy. In theory, someone looking for credit after a bankruptcy may actually appear to be less of a risk because they are not able to qualify for Chapter 7 for another eight years.

Following your bankruptcy, it is recommended that you make all your payments on time, learn how to manage your money efficiently, and find ways to reestablish your credit without trying to borrow money too soon and this could prove to be the fastest way to build credit.

You should also keep a very close eye on your credit reports and credit scores from the major credit bureaus and look for any errors or inaccuracies including any mistakes with your address, employment, or personal contact information.

The best way to start improving credit following a bankruptcy is to open a secured credit card account and make your first deposit into the account.


Although these ten strategies are a good start to finding the fastest way to boost your credit, you need to remember that it still may take several months for the credit reporting agencies to report the improvements on your credit report.

While they may be “fast” methods, they are certainly not miracle credit cures, so you need to have a fair amount of patience when it comes to seeing the positive effects on your credit report.

Be sure to dispute any errors you find with the credit bureau in question (you go here to learn how). You can also view two of your credit scores for free each month on Credit.com as you monitor your progress toward building better credit.

The post What’s the Fastest Way to Boost My Credit? appeared first on Credit.com.

Source: credit.com

Here’s Why You Need ExtraCredit®

It’s hard to imagine that your entire financial situation can be controlled by a three-digit number. But the fact of the matter is, you need your credit score for a lot. Credit cards, loans, mortgages, APRs, even renting an apartment—whether or not you qualify is based a lot on your score. And if your credit score isn’t in good shape, it can make your life that much harder.

We get it. And we want to help. Enter ExtraCredit® from Credit.com. ExtraCredit is a comprehensive credit solution, with specific and encompassing features that helps with every dimension of your credit. But ExtraCredit isn’t your typical credit solution. Think of it as a lifestyle change. Think of it as a way to take control of your financial life. 

What You Need to Know

We know that ExtraCredit could be the credit solution you need. But you don’t know that yet. Ready to learn more? Here’s what you can expect:

  • What’s ExtraCredit?
  • Who’s ExtraCredit For? 
  • The Breakdown
  • The ExtraCredit Breakdown
  • ExtraCredit Reviews
  • The Bottom Line

What’s ExtraCredit?

ExtraCredit is total and complete credit coverage. With five killer features, we’re keeping a close eye on your credit—and giving you the tools to you get where you want to go. Whether you’re in need of identity protection, credit score tracking, a discount to credit repair company or even identity protection, ExtraCredit is here to help. 

ExtraCredit has five features, each created to cater to your unique financial situation:

  • Reward It
  • Track It
  • Guard It
  • Build It
  • Restore It

It seems like a lot, doesn’t it? Well it is, but we’ve got some good news for you—you can get complete credit coverage for one low, monthly fee. 

Who’s ExtraCredit® For?

You’re a unique person with your own unique financial situation. And ExtraCredit can help. With five features targeted towards specific financial areas, ExtraCredit is a great resource that you can use to get a handle on your situation.

With that said, you might find some features more useful than others. Let’s say you’re new to the credit world and need to build your credit history. You’ll probably find Build It particularly useful. But since you don’t really have a credit history, you might not get a lot of use out of Restore It.

Think of ExtraCredit like this—you’re getting at least one feature that helps you tackle the exact credit goal you are working on. The other features? Well, they’re a little bonus. You might not need to use each feature right now, but it doesn’t mean that you won’t later on. 

The Breakdown

ExtraCredit has five features that were designed to help you stay on top of different aspects of your financial and credit health. Let’s dive right in: 

Reward It

You finally decided to sign up for ExtraCredit? Great! Because you made such a smart choice, we’ll send you an ExtraCredit debit card loaded with $5. That’s what Reward It is all about—but it gets better. When you take a look at Reward It, you’ll see a slew of financial and other types of offers that you most likely qualify for based on your credit score. When you get approved for one of those offers, we’ll celebrate with you by loading up your ExtraCredit debit card with reward amounts of up to $2500. You read that right—up to twenty-five hundred dollars. All for you, because of your smart financial decisions.

Track It

A lot of apps and services out there claim to have the only and completely accurate score you need. But the thing is, you have dozens of scores. And different lenders see different credit scores. So how can you keep track? Enter Track It. ExtraCredit will gather all your FICO® Scores and show which lender pulls which report. It’ll also keep track of all 28 of your credit scores. But it goes one step further by showing you which credit score is best for what you’re applying for, whether it’s a house or a credit card. Think of it as your lending cheat sheet.

Guard It

Here are some statistics for you: according to the Insurance Information Institute, the FTC received 4.8 million identity theft and fraud reports. Not only that, but identity theft reports have increased by 45% since 2019. 

Identity theft is no joke. So how can you stay safe? Guard It can provide the services you need, including:

  • Dark Web Monitoring: We’ll continually scan hidden websites and file-sharing networks for data breaches.
  • Compromised Account Monitoring: Worried about your finances? We’ll catch unauthorized bank changes and accounts opened with a stolen identity
  • Identity Theft Insurance: You’ll receive $1,000,000 identity theft insurance, because you’re worth it. 

Does all this security feel like overkill? We don’t think so. Your identity is important, so Guard It is here to protect it. Better safe than sorry.

Build It

Sure, credit card payments play a huge role in your credit score. But that’s only half of the payments you make, right? What about your other bills, like rent and utilities? That’s why we created Build It. Use Build It to report your rent and utilities to credit bureaus as credit tradelines. 

Restore It

So your credit’s not where you want it to be. And you need help. You’re in the right place. Restore It will connect you with an experienced credit repair service that can take a look at your situation. You’ll get a discount to work directly with the credit gurus at CreditRepair.com, a credit repair service that has a killer track record. If they’re not available in your area, you’ll get that discount with another leader in credit repair. 

The ExtraCredit Breakdown

Okay, we know that there are a lot of credit solutions out there. You’ve probably seen other services that offer things like rewards, ID protection and credit monitoring. But here’s the thing—no one offers a comprehensive service like ExtraCredit®. 

With ExtraCredit, you get five killer features all wrapped up in a box with a bow on top. Here’s a breakdown of about how much the ExtraCredit services would typically cost on their own:

  • Basic Credit Repair: $25 value
  • Rent Reporting: $10 value
  • Credit Scores: $20 value
  • Dark Web Monitoring: $35 value

With ExtraCredit you get all five services and more, starting $24.95 a month. 

ExtraCredit Reviews

Okay, we could just keep going on about how great ExtraCredit is and how it’s the credit solution that you need. But ExtraCredit has been out for a little while, so you’re probably wondering: what do ExtraCredit users actually think? 

Luckily for you, the ExtraCredit® reviews are in. We’ll let them speak for themselves: 

“A lot of features for one great price. While others offer additional services or features at additional cost, Credit.com offers some of those at one price. I recently found out that there are about 28 credit scores depending on what you’re shopping for. Credit cards, vehicles and general loans, etc. With the three bureaus. I’m glad I found them and discontinued my services with two other companies. Their site is easy to navigate through and you can see where you stand. They’re are helpful in ways in raising your score, too. I highly recommend them.”

  • Faustino D. 

“I was a little careless with my credit in my early life, but eventually became responsible and started paying attention. I had my identity stolen several years ago, and I wanted to monitor my report from all three credit bureaus in one place at an affordable price. ExtraCredit solved my problem and offered more than what I expected. My favorite ExtraCredit feature is the ability to view 28 of my FICO(R) Scores from all three credit bureaus.”

  • Khalid S.

Disclaimer: Current users were solicited and in some cases compensated in exchange for an unbiased review about their experience with ExtraCredit.

We have to admit—these reviews sound pretty promising. Wondering if it’s all too good to be true? You can try ExtraCredit out for yourself.

The Bottom Line

Sure, there are a lot of credit solutions out there. But here’s the thing—ExtraCredit impacts every dimension of your credit. So you could go with the one-dimensional credit solutions provided by the other guys. Or you could go with ExtraCredit, which offers so much more. 

ExtraCredit is here for you. It’s like a team of credit pros, all focused on monitoring your credit and providing the information you need to satisfy your credit score needs. When you work with us, ExtraCredit can help you get a handle on your finances. 

Sign up for ExtraCredit today!

The post Here’s Why You Need ExtraCredit® appeared first on Credit.com.

Source: credit.com

7 Unexpected Benefits of a Good Credit Score

Benefits of a Good Credit Score

Do people understand the benefits of a good credit score? Everyone knows your credit score is important, but what exactly are the benefits?

In the United States, 28% of its citizens rely on credit when running out of money. While it’s good to use your credit, it’s not always wise to carry over a balance from month to month. If you can’t pay it back, your credit score will take a hit.

Most Americans know that your credit score is a golden ticket to a more manageable financial life. Whether you’re looking to maintain your credit score or increase it, the right motivation is essential.

That’s why we’re going to talk about the benefits of a good credit score. To keep you motivated to strive for more and let you know what’s waiting on the other side.

7 Unexpected Benefits of a Good Credit Score

We all know that having a good credit score is something everyone should want. If you need some extra motivation to increase your credit score or are curious what a high credit score will mean for you, here are the unexpected benefits of a good credit score.

1. Starting and Owning a Business

According to Forbes, consumers owed $323 billion on personal loans in 2020. The banks limited loan opportunities because of the increasing risk of default.

On a different note, loan applicants with good credit scores will have a much better chance of receiving an approval for the funds needed to set up a business or start a side hustle. Though some lenders may consider people with lower credit ratings, lenders have a habit of charging them with a higher APR (Annual Percentage Rate).

2. Less Hassle Getting Approvals

Imagine being denied something as common as a network provider subscription. Applications for basic household utilities and other post-paid subscriptions usually require credit reports. It also applies when you’re going to rent a space and need to pass a rental credit check, where the approval will depend on your ability to meet monthly payments on time.

While having a good credit score doesn’t mean you’ll get approved for every loan, it can increase the chances of approval. You can ask for new credit or new loans, and they will be quicker to grant it to you when you have a good credit score.

3. Better Risk Means Lower Interest Rates

Aside from having a better shot when applying for loans, you won’t have to worry about being charged exuberant amounts of interest with a good credit score.

Poor credit scores can lead to having the loan denied or charged at a much higher rate. Lenders assume a low credit score means it’s probably harder to settle the credit on time. It brings a higher risk that they need to offset with higher charges.

High credit scores imply that you have settled outstanding credit on time in the past. That’s why you’re charged lower interest rates on credit card balances you carry or loans you have.

It doesn’t matter if you’re looking for a personal loan, mortgage, student loan, or are carrying a balance on your credit card. Your credit score influences the interest rates at most places.

When you’re charged with a lower interest rate, you could pay off your debt faster and use the money toward other things.

4. Lower Insurance Rates

When you’re getting your mortgage or your car loan for a lower interest rate, you can also save on the insurance when you have a high credit score.

Insurance companies have their way of calculating the probability that you will make a claim, their so-called “insurance score.” The input comes from your credit report, and the variations between the two are minimal.

Insurance companies believe that when you have a lower credit score, you will file more claims. Whether that’s true or not, they base their decisions on it.

If you have a good credit score, be sure to compare insurance companies before you settle for one.

5. Great Credit Card Deals

If you have a good credit history and want to continue increasing it, know that you can get excellent credit card deals when you have a strong credit score.

These credit cards can have lower interest, offer credit card rewards, airline miles, or cash back on your purchases. It will make sure that you keep using your credit card, which will help you keep your credit score up. Plus, it will help you save money with cash back rewards.

The important thing here is that you make payments when they’re due and try to close as much balance as you can at the end of the month.

6. Room To Negotiate

It’s always better to negotiate. That’s also the case with your credit score.

When you’re looking for something specific, be sure to ask around and see if anyone can offer you a competitive rate. If you have a high credit score, you can ask companies for a price decrease or an interest rate decrease because you always pay on time and have a good credit history.

Companies have less room for negotiation when you have a lower credit score because specific standards and procedures need to follow.

7. That Special Requirement When Landing A Job

According to CNBC, 72% of employers still do background checks, and 29% of those employers check credit reports. If a poor credit report reveals bad financial habits, it may influence the decision to hire someone.

Of course, this depends entirely on the position. When you’re handling other people’s money or holding a public function, it’s more relevant than when you’re behind a computer doing web development.

Some Consumer Facts:

  • Around 21% of the American population has a good FICO® credit score.
  • In 2020, the average credit score in the US was 710. This is a record high, despite the pandemic.
  • Between 2019 and 2020, the average credit card debt decreased by 14%, from $6,194 to $5,315.
  • 35% of your credit score is based on Payment History. This may include payment information on credit cards, mortgages, installment loans (auto loans or student loans), retail accounts, and consumer finance company accounts.
Monitor Your Credit with ExtraCredit


There are a lot of ways to keep ourselves within the boundaries of our spending capabilities. Set a goal, spend less than you earn by creating a budget, and maintain a good credit score.

A good credit score can mean unexpected benefits like quicker approvals for credit or loans, utilities, phone plans, and even renting a place. You will get better credit card deals, pay lower interest, get lower insurance rates, and can get a loan quicker to start your own business. When you have a high credit score, make sure you negotiate your rates down, as that can save you even more. Employers will also value a good credit report, which may get you the job quicker.

If you want all of these benefits and aren’t sure how to get there, here’s tips on how to improve your credit score.

The post 7 Unexpected Benefits of a Good Credit Score appeared first on Credit.com.

Source: credit.com

Boost Your Credit Score: 8 Helpful Credit Monitoring Apps

Two smiling women look at credit monitoring apps on their cellphones.

Maintaining a healthy credit score requires a good bit of focus, determination and hard work. There’s a lot to keep up with: We need to pay our bills on time, reduce debt and maintain a low debt-to-credit ratio, among other requirements—all to ensure a top-notch credit score. We can use all the help we can get! To that end, here are eight credit monitoring apps that can help keep your credit building on track.

1. Credit.com

One of the only truly free credit monitoring apps—most others require you to have a paid subscription to their digital service in order to use the “free” app—the Credit.com mobile app allows you to access your entire credit profile, including your credit score and insight into how it compares to your peers. You’ll see where you currently stand, see how your score has changed—and why—and get credit information and money-saving tips tailored to your score.

Availability: Apple and Android

Cost: Free

2. myFICO

The myFICO app is free, but it requires an active myFICO account, which means it effectively costs $20 per month or more, depending on which features you want. With this app, though, you can view and monitor your FICO scores—the most widely used credit score—and credit reports. They also provide a FICO Score Simulator, which shows you how your score may be affected if you take certain actions.

Availability: Apple and Android

Cost: Free, but requires an active myFICO account

3. Lock & Alert from Equifax

Lock & Alert from Equifax lets you lock and unlock your Equifax credit report to protect against identity theft and fraud. You’ll get an alert any time your account is locked or unlocked so you know you’re the one in control. A credit lock is not as secure as a credit freeze, but it does offer some level of protection and is generally easier to turn on and off. This app works only for your Equifax credit report, so if you want to lock all three reports, you’ll have to work with TransUnion and Experian separately.

Availability: Apple and Android

Cost: Free

4. Experian

The Experian mobile credit monitoring app lets you track your Experian credit report and FICO score, with an automatically updated credit report every 30 days. The app also comes with Experian Boost, which can help you boost your score. The app alerts you when changes to your report or score occur, and offers suggested credit cards based on your FICO score.

Availability: Apple and Android

Cost: Free, but some features require a paid Experian account

5. Lexington Law

If you’ve signed up for credit repair services with Lexington Law, you can use their free mobile app to keep track of your progress. In addition to providing access to your credit reports from all three credit bureaus and updates on ongoing disputes, the money manager feature, similar to Mint, helps you track your income, spending, budgets and debts.

Availability: Apple and Android

Cost: Free, but requires a paid Lexington Law account

6. TransUnion

The TransUnion mobile app allows you to refresh your credit score and credit report daily to see where you stand. It offers instant alerts if anything changes and offers Credit Lock Plus, which allows you to lock your TransUnion credit report to avoid identity theft and fraud. The Debt Analysis tool lets you calculate your debt-to-income ratio, and it allows you to view public records associated with your name.

Availability: Apple and Android

Cost: Free, but requires a paid TransUnion Credit Monitoring account

7. ScoreSense Scores To Go

ScoreSense offers credit scores and reports from all three credit bureaus and daily credit monitoring and alerts to changes on your reports. This app also provides creditor contact information so you can address errors on your report quickly and efficiently. Score tracking features let you review how your score changes over time and how it compares to your peers.

Availability: Apple and Android

Cost: Free, but requires a paid ScoreSense account

8. Self

Self helps you build—and track—your credit, making it great for people just establishing their credit profile or trying to rebuild damaged credit. Self offers one- and two-year loan terms, but instead of getting the money up front, the amount is deposited into a CD. You make regular payments for the term of the loan (at least $25 per month), and then get access to the money. There is no hard inquiry to open the account, but your payments are reported to all three credit bureaus, helping build your credit. Plus, while you are repaying your loan, you will have access to free credit monitoring and you VantageScore so you can track your progress.

Availability: Apple and Android

Cost: Free, but requires a Self loan repayment of at least $25 per month

Credit Monitoring Apps to Fit Your Needs

With so many different options, you’re sure to find a credit monitoring app that meets your needs. And don’t forget: you can always check your score for free using Credit.com’s free Credit Report Card.

The post Boost Your Credit Score: 8 Helpful Credit Monitoring Apps appeared first on Credit.com.

Source: credit.com

How to Build Credit with a Store Card

how to build credit with a store card

Disclaimer: The views and opinions expressed in this article are those of the author only and are not endorsed by Credit.com.

When a consumer wants to start building credit, a logical step to take is to get a credit card. However, credit card issuers want to check your credit and payment history before they approve you for a card. Now, if you’re just starting out with credit, you have no credit history to show for, and are often not eligible for credit cards with higher credit limits and rewards.

How do you then get out of this helpless circle? One option is getting a store card. Store cards are often easy to get approved for, even without having previous credit history. And they can help you get into the credit world, at least for starters.

What Is a Store Card?

Store cards are credit cards made by specific stores or brands, for instance; Costco, Walmart, Amazon, etc. These cards are made to be used for purchases at the store. Store cards often offer perks at the store such as bonus points, in-store discounts, and more.

There are store cards that act as credit cards and can be used in any other store on all purchases, besides the specific store. However, the card benefits will usually be specifically at the store. Compare different credit card offers to see which one works best for you. 

How a Store Card Can Help You Build Credit-Easy Approval

Store cards are often thought of as beginner cards. They’re often easy to get approved for, even for someone completely new to credit.

That’s how a store card can help you jump-start your credit journey. If you have zero credit, regular credit cards may not approve you for credit cards because they want to see your payment history first. But store cards may have higher approval odds. Carefully consider one in your credit-building journey.

Downside of a Store Card

Though a store card is easy to get approved for, you most likely won’t get approved for a high credit limit. You can get approved for a limit of as low as a couple hundred dollars with a store card. In addition, the APR will usually be very high on store cards.

Store Cards and Your Credit Score

If you’re a beginner to credit and want to build your credit using a store card, here’s how.

  1. Research store cards that report to at least one credit bureau.
  2. Apply for a store card and if approved, use it to. Simply build your credit history by using and paying the card payments. By doing so, you work toward establishing a positive payment history to help get other credit card types later.
  3. After some time of being with a store card, a good idea is to see how your credit score has been affected. Then you can see if applying for a credit card that is a step up to the next level of  building more credit history. See some cards that are geared toward building credit history here.

To sum it up, store cards are great for breaking into credit. After some time, you may become eligible for cards that can help you keep building and establishing your credit. From there, to the premium cards you go!

Store Card Pros and Cons 

Store cards have their pros and cons. 

Pros Cons
Easier to get approved for It’s not considered a real credit card according to FICO
Helps you start building credit Higher interest rates
Store perks and benefits Can sometimes only be used at the store/brand
Low credit limits 

Alternatives for Building Credit

Building your credit is not limited to getting a store card. There are alternative ways to go about building your credit.

Secured Cards

Secured cards work a little differently than regular credit cards. With a secured card, the card issuer requests a deposit from you, a set amount of money which they hold as collateral in case you fail to make payments. The deposit amount is usually the same as your credit limit (a $500 deposit lends to a $500 credit limit).

Secured cards are generally easier to get approved for and with some cards, you don’t need any previous credit history. So, they’re good as a first card. As long as you make on-time payments, you’ll be helping build your credit history. 

Secured Card Pros and Cons

Pros Cons
They’re easier to get approved for You must leave a deposit 
They help start up your credit They often don’t earn rewards
Compare Secured Credit Cards

Authorized User

Another alternative to store cards is building credit through becoming an authorized user on an existing credit card.

When you’re not in a credit position to get approved for your own credit loan, you can get added as an authorized user on the account of a friend, spouse, family member, acquaintance, or anyone else. Usually, depending on the card issue, only family members are allowed. Verify this with the card issuer/ 

The primary account holder adds you as an authorized user on the account. Only do this on an account that is in good standing. Once the account is reported to the credit bureaus and to your credit report, the account history of the card becomes yours too.

So, if the primary has had the card open for two years and has made on-time payments all that time, that’s now reflected on your credit report. This can help build your credit history.

Pros and Cons of Becoming an Authorized User

Pros Cons
It can help your credit You could have conflicts with the primary cardholder
It’s simple to do and there’s no need to lock up funds You could be removed at any time
You can build healthy spending habits Delinquencies impact your credit

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How to Start Building Credit as a Recent College Grad

Building Credit Recent College Grad

Graduating college can come with a lot of implications and responsibility, and those associated with your finances are certainly no exception. On top of the need to get your career off the ground, you should also think about how this impending career and salary will help you get your relationship with your personal finances in good shape, as well. 

Prior to college, you probably did not have any credit. And during college, if you weren’t using a credit card or participating in other practices that establish and build credit, you’ll basically be starting from scratch. This can be a great spot to be in because it sets you up to grow your financial reputation without having to rebuild it from any previous blemishes on your record. At this transitional and vulnerable time in your life, think about your future, and be sure to include those future thoughts in your decision-making so that you can (somewhat) effortlessly stay on track. This is some of the money advice college grads never get, but definitely should. 

Student Loan Repayment

If you took out student loans to fund your education, you’re likely feeling a tad overwhelmed by the outstanding balance and impending payments to pay it all back. While this type of debt is sizable, it’s not something to fear to the point of disregard. So, many people use student loans to cover college costs, which is good news for you because there’s no shortage of tips on repayment strategies for you to consider. 

Paying your monthly minimum each month is going to help you begin to establish credit. While it’s acceptable to follow this strategy, it might not get you where you want to be in terms of growing your credit score. If you can, think about ways to dedicate more money towards repayment each month so that your debt-to-income ratio can become more favorable to you, faster. 

Read More: What is the Average Student Loan Debt?

A savvy way to accomplish this is through refinancing. Although you’re just starting the process of paying back your student loans, that doesn’t disqualify you from refinancing. The rates that were in effect when you took your loan out might be higher than they’re now, in that case, a refinance can shave years off your payments simply by decreasing your total interest. Your monthly rate will likely decrease as well, which means that potentially you can pay down principal faster if your budget that allowed for the previous, higher amount, is still manageable. 

Get Professional Guidance 

Like it or not, money is essential in life. While the amount you have doesn’t determine the level of importance, the simple fact that you need money to be able to get through life is undeniable. At this beginner stage, consider meeting with a credit counselor. These professionals can help you identify goals, discuss different strategies, and help you decide if it is right for you at this time. 

Since this is likely your first time managing your money independently as an adult, and at this level, the habits you build now are probably going to be the ones that stick. Your credit score is sensitive but powerful. As you walk through various stages of life, that number is going to be what determines things like mortgage rates, car loans, and even your ability to start your own business even if that’s years from now. 

Budget Appropriately

After having spent a few years scraping pennies together to split a pizza three ways with your roommates, you’re going to be tickled to receive that first job salary, and the paychecks that come along with it. But don’t get careless. Before you cash your first check, examine your finances, and set a budget for yourself. Some of the best budgeting methods are simple and straightforward, which is ideal for a beginner. A great piece of advice here is to continue to live as you did in college and operate on a shoestring budget as far as your extra money goes. 

Paying your bills on time is going to help you improve your credit score at a steady and consistent pace, so you won’t want to fall behind. The occasional splurge is fine, but make this the exception and not the rule. It might not feel the most exciting or fun to dedicate your first job finances towards responsibility. However, if you put this into practice now, you’ll have to work at it less and less over time. Then, maintaining your good credit will be a natural consequence of your habits instead of something you have to consciously work at. 

Related Read: Side Hustles for College Students

Use Credit Cards Strategically

One of the best ways to build credit is by using credit. Keep your momentum alive by applying for a credit card, one with perks that appeal to you, and terms that you can manage. You might not yet be able to qualify for a traditional credit card, but a secured credit card should be well within your capabilities. Your credit limit will probably be low, but that is ok. The point here is to get into the practice of using a card, and paying it off, on time and at least at the minimum, consistently month to month. 

Browse Credit Cards for Students

A credit card should work for you in terms of what you get back from it. Not all cards are created equal so definitely shop around before you just randomly pick one. Perks like airline miles and cash back are very popular places to start. If you take out a card and begin to use it and quickly notice that you’re not savvy enough to manage this responsibility yet, cut the card up. Closing credit accounts is one of the bad credit habits to avoid and can negatively impact your score. So you are better off cutting the card up, ceasing to use it, and continuing to pay down the balance without adding to it. 

The post How to Start Building Credit as a Recent College Grad appeared first on Credit.com.

Source: credit.com