Building Credit the Smart Way

In this article, we’ll take a look at the ways to build credit – with or without a credit card.

Building Credit with a Credit Card

When it comes to building credit, the key is to make timely and full payments every month. With a credit card, as well as a secured card, will help you build payment. By choosing a routine monthly expense such as utility bills, charging it on your card and paying it all off immediately is a sure way to increase your rating.

35% of your credit score comes from payment history. Therefore, it is imperative that consistent full and timely payments are made to build your credit.

A secured credit card is a viable option for those who are only starting to build their credit. Because creditors are given a guarantee in the form of collateral, being approved for a secured credit line is more feasible compared to an unsecured card.

Building Credit without a Credit Card

Another option when it comes to building credit is to seek for a credit builder loan from a reputable credit union.

This loan is an instalment loan whose terms rangefrom 6 to18 months. By making timely payments to these loans, these are guaranteed to help build credit as credit unions report these to credit reporting agencies.

If you are looking for a credit builder loan, it is suggested that you go for those that are being reported to all three credit reporting agencies – Experian, Equifax and TransUnion. By making timely payments, your credit will be up and running in no time.

With this kind of loan, the lender deposits the money you are borrowing to a savings account that is named on your behalf. You will the pay the loan off with a series of payments made every month. Once the loan is paid in full, you will then have access to the money in the savings account.

Therefore, a credit builder loan, you can not only build your credit, but also jumpstart your own savings account as well. However, it is critical that timely payments are made on a monthly basis. Otherwise, any late or defaulted payments will hurt your credit – remember that these are being reported to the bureaus.