Building a good credit score is often a key to financial freedom, but establishing or improving your credit score can be overwhelming. There are many suggestions out there about building and maintaining a solid credit score, some of which might be more accessible than you think. Three simple ways to build your credit score are making payments on time, limiting your number of credit card applications, and taking out a credit builder loan. Let’s dive into the nitty-gritty of how you can put these steps into action.
1. Make Payments On Time
When it comes to good credit, reliability is incredibly important. With busy schedules and multiple bills to keep track of, missing a payment is too easy! Making payments on time will help avoid a negative impact on your credit score. This includes but is not limited to rent, loans, and credit cards. Setting a reminder about payment deadlines is an excellent strategy to ensure you make payments on time. If possible, coordinate paying most or all of your bills on the same day each month, so you don’t have to remember multiple deadlines.
Scheduling automatic payments is another great way to avoid missing a payment. Remember that it is still important to check your accounts to confirm automatic payments went through to avoid late fees and negative impacts on your credit score.
2. Limit How Many Credit Cards You Apply For
There is an abundance of tempting credit card deals available to apply for, but you should monitor how many credit card accounts you have. Applying for too many credit cards can negatively impact your credit score due to credit checks that financial institutions run to determine if you qualify. What’s more, having too many cards can be a sand trap for spending beyond your means, which may lead to debt. Should you find yourself in this situation, consider a debt consolidation loan to help get back on track.
If you’re reading this and wondering if you have too many credit cards, don’t rush to close them. Closing credit card accounts can negatively affect your credit score, so you shouldn’t close one without good reason, such as steep annual fees. Once a card is open, in most cases, the best strategy is to leave it open and aim to spend a smaller amount than what you have available.
3. Take Out A Credit Builder Loan
If you are looking to start building credit, taking out a credit builder loan can be an excellent way to get your foot in the door. These loans are designed specifically to help people start establishing credit! For these typically smaller loans, it is important to make regular payments, proving that you are reliable to the credit bureau, which will receive a record of all payments. Once you are approved, the bank will hold the loan amount for you to receive after all payments are made.
SPECIAL OFFER: CREDIT BUILDER LOAN
Are you looking to start building your credit score? Common Trust’s Credit Builder Loan could be the right place to begin. From now until May 31, 2021, we are offering members a chance to get started establishing credit through this loan. We are offering rates as low as 8% with loan terms of up to 9 months. Learn more here, or reach out to one of our team members if you are ready to get started!