Establishing good credit is an essential part of financial health and can open up a world of opportunities to you. Good credit can help you get approved for loans, credit cards, and other financial products. It can also make it easier for you to rent an apartment, get a job, and get better insurance rates.
Unfortunately, many people don’t understand the importance of building credit and don’t know how to start. Here are 10 of the best ways to start building credit starting today.
1. Get a Secured Credit Card
A secured credit card is a great way to start building credit. Secured credit cards require a cash deposit as collateral and will generally provide you with some type of credit limit. You can use the card like a regular credit card, but your spending will be limited by the amount of money you have deposited. This can be a great way to build credit, as long as you make sure to pay your balance on time and keep your spending within your limit.
2. Become an Authorized User on Someone Else’s Credit Card
Another great way to start building credit is by becoming an authorized user on someone else’s credit card. This means that you will be able to use the card, but the primary cardholder will be responsible for all of the charges. This can be a great way to get a head start on building credit, as long as the primary cardholder pays the balance in full and on time.
3. Use a Credit Builder Loan
A credit builder loan is a type of loan that is designed to help people build their credit. These loans are typically small, short-term loans that require you to put down a deposit. The money from the deposit is then held in a savings account, and you make regular payments on the loan. Once the loan is paid off, the savings account will be released to you. This is a great way to get started building credit, as long as you make sure to make all of your payments on time and in full.
4. Become a Co-signer on a Loan
If you know someone who needs a loan, becoming a co-signer can be a great way to start building credit. By co-signing, you are agreeing to take responsibility for the loan if the primary borrower fails to make payments. This can be a great way to get started building credit, as long as the primary borrower pays the loan off on time and in full.
5. Get a Retail Store Credit Card
Retail store credit cards are another great way to start building credit. These cards are usually easier to qualify for than a traditional credit card, and can provide you with a nice line of credit to get started. Just be sure to pay off your balance each month, as these cards tend to have high interest rates.
6. Get a Gas Card
Gas cards are a great way to start building credit, as they offer a convenient way to pay for your gas and can be used to build credit at the same time. Just make sure to pay off your balance each month and keep your spending within your limit.
7. Become an Authorized User on Someone Else’s Line of Credit
If you know someone with a good line of credit, you may be able to become an authorized user on their account. This will allow you to use their line of credit, and the payments they make will be reported to the credit bureaus. Just be sure to make sure the primary cardholder pays their balance on time and in full.
8. Use a Credit Union Loan
Credit unions are a great option for those looking to build credit. Credit unions typically offer lower interest rates and more flexible terms than other lenders, and can be a great way to get started building credit. Just be sure to make all of your payments on time and in full.
9. Participate in a Credit-Building Program
There are a number of credit-building programs available that can help you get started building credit. These programs can provide you with a line of credit, and the payments you make will be reported to the credit bureaus. Just make sure to read the terms and conditions carefully before signing up for any program.
10. Get a Job
Having a job is one of the best ways to start building credit. Having a steady income will make it easier for you to make your payments on time and in full, and will also help improve your credit score.
Establishing good credit is an important part of financial health and can open up a world of opportunities. The best way to start building credit is to start small and take steps to improve your credit score over time. By following the tips above, you can start building credit today and begin to reap the rewards of good credit.