These days you need credit for just about everything car, house, cellphone… even jobs run your credit before hiring you now. Credit is not just about borrowing money to buy things you can’t afford. Establishing credit has become absolutely necessary to provide yourself with the most opportunities in life. But how do you build credit, especially when it seems like you can’t get approved for accounts to start building credit in the first place? The truth is that most people with good credit scores were taught how to build them. So, right now I am going to teach you three ways to take your credit to the next level.
Start Monitoring Your Credit to Improve Your Credit
Never under estimate the importance of this step. It is not uncommon to find mistakes on your credit report that you can dispute and have removed. On top of that, it is even possible to negotiate to have derogatory info (bad marks on your credit report) removed from your credit report by the creditors that put them there. Continuing to monitor your credit keeps you aware of how your financial decisions impact your credit score. You can stop bad habits early or see what you’re doing right. There are several apps that help you monitor your credit score for free like Credit Karma and Credit Sesame. AnnualCreditReport.com provides an annual credit report from all three major reporting agencies once a year. Due to the financial stains of The Pandemic, they will be providing free credit reports every week for the next year.
Improve Your Credit Now by Getting a Secured Credit Card
You build credit buy using credit responsibly. But if you don’t already have good credit, how do you get approved for accounts to use responsibly? One way to work around this is to get a secured credit card. With a secured credit card you place a refundable security deposit and that amount becomes your credit limit. The security deposit lowers the risk to the bank allowing the bank to be much more lenient with approvals. The best part is you can still dramatically improve your credit by using your secured responsibly just as you would with an unsecured card. Make sure you do not increase your normal spending, use less than 30 percent of your available balance, and pay off your card in full every month, and you will most likely see your credit score rise significantly.
Request a Credit Limit Increase
So you already have at least one credit card and you have been using it responsibly. At this point you likely have decent credit, but maybe you still want to continue to improve your score to get the best possible rates on things like car loans or a mortgage. A credit limit increase can improve your credit score by increasing your available credit. If you increase increase your available credit, without increasing your spending, your credit utilization goes down, and your credit score goes up. Many banks allow you to request a limit increase through their customer service app. Others, you can call customer service and make the request. Be aware, that some banks do a hard credit inquiry to decide whether to give you the limit increase. Make sure you find out ahead of time if your bank does this and whether or not you can afford a hard inquiry at the time.
Building credit takes patience, hard work, and dedication. Many amazing people have a hard time with credit because they’ve never learned how the system works. Its possible to be trying really hard but spinning your wheels. By reading this post you’ve already taken a crucial step in improving your financial literacy. Stay at it, never stop learning, and never give up!
