Building credit can be a difficult process for someone who is just starting. You might not have any source of income, and you may have to work on your credit score before getting approved for any loans or lines of credit. But there are some steps that you can take to build your credit, even if it’s just in small increments.
Here are some tips on how to build credit:
Start a credit card account
If you don’t currently have a credit card, the first thing that you should do is open up a credit card account. Once you have made your initial application for the card and it has been accepted and activated, you can begin using it to make purchases. Use your credit card exclusively and pay off your monthly balance. This will enable you to build your score over time.
If you already have a credit card, consider applying for another one. You can use the card for small purchases and pay it off regularly. This will also help build up your credit score if you use the card responsibly.
Ask family and friends to add you to their accounts
If you don’t have a credit card or have maxed out your account’s allowable limit, ask someone with good credit if they would be willing to add their name to the account.
You might need more time to build your credit score, but you will still be able to establish it. And you’ll have access to purchasing power, which can come in handy when building up your credit.
Try to get a small, short-term loan
If you need access to some money to make a car repair or purchase a new computer, and you can’t borrow the funds from someone else, consider trying to get an unsecured personal loan. You can do this by applying for an online loan.
An unsecured loan will be unsecured by collateral, so you don’t have to worry about having something that could be seized if you don’t pay back your debt. But it would help if you still were incredibly careful with the loan.
Make sure that your credit score is accurate
One of the most common places people make mistakes when building credit is when they get a credit report. You should always request a copy of your credit report and check that it has all the necessary information. This can be done by reviewing your credit report online or contacting the company that gave you your credit report.
The reason that it’s important to check your credit score is that it’s the big picture of your credit. It can show you whether or not you are getting the most out of your available credit and whether or not you’re on track to building credit in the long term.
Another way to build credit is by establishing a credit history. If you have a credit card but don’t use it much, you’re reducing your chances of improving your credit score. Work on paying off the card monthly and signing up for automatic payments from your checking account. If you can do that consistently, you’ll see higher credit scores over time.