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No Credit, No Problem: Everything You Need to Know About Building Credit

Around 45 million Americans live with no credit score. 

This can negatively impact everything from your ability to get a mortgage of a home to your employment prospects.

Lucky for you, there is still hope. Over several months you can work toward building credit. 

Follow our tips to discover how to build credit below. Here we go!

  1. Make Repayments in Time

One of the most important ways to build credit is to make repayments on time. If you miss the deadline for payment, then you could damage your credit score.

You could set up automatic payments with your credit card provider. This allows you to avoid missing payments for regular outgoings. 

Always make sure you have enough money in your bank balance to pay off any outstanding debts on your credit card.

  1. Pay Your Rent on Time

Over 35% of Americans live in rented property. 

You may not even realize it, but your landlord could be using a rental payment system. Therefore, whether you pay your rent on time or not, your landlord could be reporting your track record back to the credit bureau.

Consequently, it’s extremely important to ensure that you continue to pay your rent on time month by month. If you fail to make payments on a single month, you could damage your credit score. 

  1. Set up a Savings Account

Over 55 million Americans don’t have any savings. 

But, you should know that a savings account shows that you can manage your money responsibly. 

It doesn’t matter how much you transfer from your current account to your savings account each month. 

It shows on your credit report that you’re prepared for a rainy day.

  1. Consultant an Expert

You don’t have to do it all by yourself either. You can consult with an expert to determine financial advisor or credit specialist.

This way you discover the expert knowledge about how to repair the damage done to your credit score. 

By using credit repair software, your advisor will be able to analyze your credit report and help you to improve your credit score. 

  1. Check for Mistakes 

Your credit report could display errors and mistakes, which could have damaged your credit score. Therefore, you need to regularly check your credit report to see whether any mistakes have emerged. 

If you recognize any errors on your credit report, you can file a dispute letter to the credit bureaus. You can only improve your credit score if your credit report is up to date and accurate. 

  1. Reduce Credit Card Limit

Many people don’t realize that your credit score is partly determined by your available credit. 

The amount of credit you have compared with how much you have actually used up so far each month. This is called your “credit utilization rate.”

You need to keep the percentage you’ve used to below 30% in order to ensure a good credit score. 

If you want to improve your credit score even further, you can also lower your credit limit altogether. This will also contribute to a better score.

  1. Get a Secured Credit Card

A secured credit card is perfect for people with either no or bad credit. They also have nearly guaranteed approval for any customer. 

This is because you would be required to provide a “refundable security deposit,” which is equal to your credit limit. This prevents you from being able to spend more than you cannot afford each month. 

This makes it an excellent way to demonstrate to the credit bureaus that you’re capable of managing your money responsibly. 

  1. Avoid Loan or Credit Card Applications

If you’re always applying for even more credit – how can you build your credit score? Now you’ve got your secured credit card, you don’t need to apply for any additional credit cards or loans. 

Every time you apply for a credit card or loan it shows up on your credit report. If you’re consistently applying for more credit, you’ll damage your credit score further.

It’s especially important to avoid speculative credit card applications. If you’re considering applying for a credit card, make sure you do your homework before. This way you can better determine whether you’ll be accepted for the credit card or not. 

  1. A Clean Employment History

Nearly 30% of background checks on job applicants are credit reports. 

Many people don’t realize that their credit score can also influence whether they’re accepted for a job or not.

However, it’s also important to know that your employer can inform credit bureaus about your employment history as well. 

How you make your income may also affect whether you’re permitted to borrow more money in the future.

If you want to appear trustworthy in the eyes of lenders, then you need to make sure you have a clean employment record which doesn’t raise suspicions.

  1. Avoid Bankruptcy

The number of people declaring personal bankruptcy is on the rise, especially among senior citizens. 

This is the worse thing you can do to your credit score. It will appear on your credit report for up to a decade.

It will also be nearly impossible to be granted a loan while this is on your credit report. Apart from quick loans which do not require a credit check. 

If you’re struggling with a poor credit score, it may be tempted to start fresh and declare bankruptcy. However, you should definitely avoid this under any circumstances. 

Learn More About Building Credit 

Now you know how to work toward building credit with our top tips. Before you know it, you’ll be back on a healthy financial footing.

Do you have high credit card debt? Check out our blog for tips on how to reduce your debt now.

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