Your credit score dictates how much lenders can trust you financially. And building it from scratch can be a real pain.
It all depends on your credit score, from financing a new MacBook Pro to getting a loan in your name to help you out of a bind.
Typically, your credit score will fall between 350 to 800. Where anything above 750 is considered excellent. Whereas everything below 600 means you’re a risky investor.
Oh man, how the heck am I supposed to improve my score?
That’s probably about what you’re thinking. Don’t worry; there are tons of ways to improve your credit score (even if you’re in debt). Through this article, we will list just a few.
Building Up Your Credit From Scratch (Where To Start)
It’s ridiculous as a college kid. How are you supposed to prove you can pay off your debts if no one wants to give you the option to finance in the first place?
Credit-Builder Loans Exist
Credit-builder loans do precisely what the name says. They are loans designed specifically to help people like you build credit from scratch.
But, it’s not exactly your typical loan.
The lender holds these loans until you pay the total amount. After which it is released to you. In a way, it’s a pretty great way to start saving.
Check out this link to find a few places where you can apply for a credit-building loan.
Ask A Relative To Co-Sign On Something For You
Nothing is worse than feeling rejected the first or second… even the third time you apply for financing. It’s not like you can’t afford it. Just no one gives you the chance to build your credit, right?
Well, there is a way around this known as co-signing.
Essentially someone who trusts you will co-sign on your loan. Essentially, they are responsible for the total borrowed (financed) if you do not pay.
Before you opt for this option, double-check and triple-check that you can afford what you are financing. After all, you don’t want someone else on the hook for your expenses.
You Should Be Able To Apply For A Secured Credit Card
Credit cards are a fine line of trends. We only recommend this option for those responsible enough to handle the consequences of overspending on their credit card. This has been the fast route to debt for more than just one small family.
Typically, on a credit card, you want to be earning 3x the maximum limit to “afford” it.
But again, secured credit cards are not exactly like your traditional expectations.
Instead of having “free” money on demand. Secured Credit Cards require you to deposit a specific cash amount. This amount usually is the same as your credit limit.
The functionality of the credit card still works the same.
You can buy on interest and make payments before the due date. The only difference is that the money you deposited will be used as collateral if you fail to pay. You are making it an excellent way to build up credit from scratch.
What Happens If I Need To Repair My Credit?
Pay Your Bills On Time, And Pay More Than You Need To
With life getting more expensive, staying out of debt is challenging.
And when you fall into debt, it’s hard to get out.
But that’s not what this article is about. Suppose you need to improve your credit. The first thing you want to do is prioritize your expenses.
Bet you, and you didn’t know that paying on time accounts for almost 35% of your total credit score?
If you can pay on time and more than needed, you are on the right path.
Not only will you get rid of debt quicker, but you will also reduce your total cost of repayment thanks to interest. But you will also be working on building up a more appealing credit record for lenders to review. After all, they only care about whether or not they will be paid back in full.
Make Sure There Are No Mistakes On Your Credit Score
Oh yeah. If you didn’t know, you could apply once a year to get your credit score for FREE. You can get your credit score by heading over to this site.
Why is this important?
It’s not uncommon to find mistakes in your credit score. Enough mistakes could make a substantial difference in your overall rating. So you want to go through your score with a fine-tooth comb and ensure everything is correct. Find out how to do precisely this by reading this article.