What Is the Fastest Way to Build Credit?
27% of U.S. consumers are considered credit thin.
This means that they don't have enough credit to qualify for credit.
Another 1.7% are completely unscorable.
As you can imagine, it can be really hard for consumers to get ahead financially when they are excluded from the credit system.
If you're in this situation, don't give up. Keep reading for the best things you can do to build credit right now.
Pay Your Bills on Time
Paying your bills on time is one of the best ways to raise your credit score. When you make late or incomplete payments, your credit score takes a big hit. Always pay your bills by the due date and satisfy the full amount.
Pay Down Debt
Reducing the amount you owe can also improve your credit score. Focusing on paying down high-interest balances first.
Check Your Credit Report for Errors
You are entitled to a free copy of your credit report each year. Take this opportunity to look for any errors on your report and file a dispute if necessary.
Make Frequent Payments
Making smaller, more frequent payments throughout the month can help reduce your credit utilization ratio. Just make sure you hit the minimum amount due each month.
Increase Your Credit Limits
You always want to keep your balances as low as possible. If they are above 30 percent, ask your lender for an increase. This will reduce the percentage of credit you are using, boosting your score.
Keep Your Accounts Open
When you pay off an account, always keep it open. The longer you have had accounts open, the better.
Become an Authorized User
Consider becoming an authorized user on the account of a friend or family member with a strong credit history. You don't even have to use the card to benefit from their good credit.
Get a Secured Credit Card
Secured credit cards function like normal credit cards with one big difference. Your credit limit is the amount of cash you put down upfront. These cards can help you build credit while posing little risk to your lender.
Use Your Alternative Credit Score
If you have no credit history and are having a hard time qualifying for credit as a result, you have an alternative option.
Traditionally, lenders have used 3 digit credit scores furnished in reports from the major credit bureaus. For younger generations and the credit invisible, this method just doesn't work. An increasingly popular option is alternative credit scoring.
Alternative credit scores are based on more current and reliable indicators of financial health and don't require a history in the old credit system. Alternative credit scores take into account factors like property ownership, bank account balances, spending habits, and bill payments.
The best way to build credit when you don't have any is to get a loan from a lender that uses alternative credit scores. This can help you get your foot in the door of the credit system.
Are You Looking to Build Credit?
If your credit history is lacking, it can be hard to build credit.
If you can't qualify for a loan because you don't have enough credit history, how can you possibly build up your credit?
If you're struggling because of poor or no credit, you are not alone. Alternative credit scores have become the latest financial trend to benefit millennials and those with insufficient credit. Using your alternative credit score can help you break into the traditional credit system.
Click here to create a free account and access your alternative credit score today so you can start building credit.