9 Easy Ways to Build Credit

1) Check your credit report - EVERYONE should do this a minimum of once a year. It’s amazing how much wrong information I see on credits reports each and every week!

 

2) Establish checking and savings accounts – This is one that gets overlooked sometimes, but lenders like to see stability.

 

3) Understand some basics of credit scoring – This could be another email in itself, but just remember a couple of quick things… Length of history and balance ratios. Don’t necessarily close old accounts. Try to keep your balance ratios to 30% or less across the board. Three cards at 30% or less is MUCH better for your score than one card at 80%!

 

4) Piggyback on someone else’s good credit – It used to be that the credit card companies were willing to put ANYONE on a card as an authorized user. It’s not quite so easy anymore, but it’s still a great way to help build credit.

 

5) Apply for credit early in life – Okay, so some of us can’t go back at this point. Still, for your younger clients, having a card early…AND being responsible with it…is one of the best things they can do with their credit profile.

 

6) Apply for a secured credit card – This is a great way to establish credit. A person deposits money in an account and gets a credit card up to that amount. Be careful to check any fees associated with this type of card. Credit unions can be great places to get a secured card.

 

7) Get a store card – These generally don’t do quite as much as a regular credit card (Visa, etc…), but they certainly can enhance your credit profile and show a clean history.

 

8) Get an installment loan – A mix of credit types is usually a good idea. Obviously, a car loan is the most recognizable type of installment loan. However, check with your bank on a small personal loan. Even if it’s $500, when paid back on time, this type of installment loan can be a great credit enhancer.

 

9) Use revolving accounts regularly – If your account is not used within 6 months, your creditor may cancel the account. Even if you don’t need to, use your account for something small to keep it active. Go buy a pizza one night! Just don’t be late on the payment!

 

Got questions?  Contact Andy