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Published On: Wed, May 16th, 2018

Effective Ways To Build Credit

Have you ever known anyone who could just buy a home or car outright with cash? Probably not, and if so you will probably only know one to two individuals that will be able to accomplish this task. In fact, a task like this is today’s economy would take years and years of saving. Unfortunately, you don’t always have the opportunity to save for years before you have to turn to credit. What if your kid needs braces or your car breaks down out of the blue? You are going to have to come up with the cash to cover these things, which can be were a loan or credit comes in handy. Unfortunately, without any established credit it can be hard to get a loan or utilize your credit. Don’t worry, as there are a variety of ways that you can build your credit for these exact situations.

photo/ Michael Jarmoluk via pixabay

Consider A Secured Credit Card

If you are looking to build your credit from nothing one of your beset options is without a doubt a secured credit card. These cards are so good, because they allow you to make cash deposits once you get the card and that cash deposit will usually be your credit limit. So, if you only put down a thousand dollars on the card, you will have a credit limit of a thousands dollars. This is somewhat similar to a prepaid credit card. However, a secured credit card can be used just like a regular credit card as you can buy things, make payments, and you will have to pay interest. The only difference is that you almost can’t go in debt, because you can never break your credit limit, which you have already covered with your initial deposit.

These types of credit cards were not designed to be a lifetime tool, but they can help you get a foothold on the credit world.

Try A Credit-Builder Loan

The Better Credit Blog suggests that one of the best ways to establish credit is by taking advantage of a credit-builder loan. These loans were designed to help you build credit and they involve borrowing a certain amount of money for a bank. Once you have borrowed a certain amount of money the bank or lender will hold on to that amount until you have repaid it. It’s almost like they are giving you a loan, but not giving you the cash. This will ensure that you don’t get the cash and just run out and blow it without paying it back.

Take Advantage Of Someone Else’s Credit

Do you have a family member or a girlfriend who already has established credit? If so, it is possible that one of these individuals could put you on their credit card as an authorized user. Once you become an authorized user under someone else’s credit card you will enjoy the same amenities as them, while building your credit at the same time. Just keep in mind that many people might be hesitant to do this, because if you do abuse the credit card, you aren’t legally required to pay back the charges. The original owner of the card will be responsible for the charges.

Utilize What You Are Already Paying For

Are you currently paying rent every month? Well, shouldn’t you get some credit for that? Yes, and you can with the assistance of certain companies. These companies will take your bills and put them on your credit report showing that you are a responsible tenant who is willing to pay his or her debts on time. The only downside to this is that there are a lot of credit score companies that do not take these types of payments into account. However, just being recognized as a responsible renter could be the very thing that you need to get a credit card or score the loan that you are seeking.

Get Assistance From A Co-Signer

A Co-Signer is somewhat similar to that of becoming an authorized user on someone else’s credit card. You can get a loan or an unsecured credit with little to no credit, but you will need someone else with established credit to sign the agreement for you. This means that if you default the co-signer will be responsible for your charges, but you will secure the loan or credit card that you are seeking.

Author: Ben Mart

About the Author

- Outside contributors to the Dispatch are always welcome to offer their unique voices, contradictory opinions or presentation of information not included on the site.

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