Last updated on November 28th, 2022
Your credit score isn’t something that you can just ignore. In fact, not only are you more likely to be able to buy the big-ticket items you’ve always wanted with a good credit score, but you’ll save money on the lower interest rate loans that you’ll qualify for as well. If you’re having trouble qualifying for financing on anything from a mortgage or auto loan to a refrigerator, consider these handy credit tips (and credit cards) to quickly build up your credit score.
7 Tips for Boosting Your Credit Score
Here are seven helpful tips that can help you boost your score and take your credit game to the next level:
Examine Your Credit Report and Dispute Errors
Checking your credit report is a great way to start improving your credit score. You can ask for a free credit report from a credit-reporting agency every 12 months (or all three, if you’d like). In these reports, you’re looking for any kind of discrepancy that contradicts information from your own records, such as an incorrect account number or balance. You can then dispute those errors with credit agencies and have them either corrected or removed if they can’t verify the right value.
Maintain a Low Credit Utilization Ratio
Having large outstanding credit card balances can also be a hindrance, so to start improving your scores, paying them off can make a big difference. If you can’t pay everything that you owe on your credit card account all at once, at least try to not spend more than 30% of your limit. This is known as having a good credit utilization ratio and shows that you’re not fully dependent on credit cards. Alternatively, you can ask for a credit limit increase to improve your credit utilization ratio. Still, if you’re already delinquent on a few payments, your credit card issuer may not be so generous in granting it to you.
Those looking to reduce their credit utilization might consider the OpenSky Secured Visa. While OpenSky’s security deposit won’t appeal to everyone, that deposit (along with no credit check needed), makes the OpenSky Secured Visa card an excellent option for people with average credit who want to quickly boost their credit score. Thanks to no hard inquiry on their credit report, a person seeking to quickly raise their credit score can open an OpenSky Visa account, make a large deposit, and instantly increase their available credit. This new credit line will also significantly reduce their credit utilization, raising their credit score with no adverse effects.
Apply for an Entry-Level Credit Card
Surprisingly so, you can still be approved for select credit cards even if you have poor credit or no credit at all. As the qualifying factors for retail credit cards, student credit cards, and secured credit cards are often more lenient than other cards that issuers offer, they can be used as tools to build your credit score so long as you make sure to pay your bills on time. Retail credit cards include those offered by department stores and grocery store chains and commonly offer in-store discounts on product purchases for cardmembers.
Student credit cards generally have higher approval odds for individuals with no credit. However, they have fewer perks than you may be hoping for. When it comes to secured credit cards, your credit limit is determined by the money you’re able to deposit. While there are little to no benefits that come with most secured credit cards, a steady payment history may convince your issuer to convert your secured card to an unsecured one, getting you one step closer to the point- and perk-filled cards you want in your wallet.
The Chime Credit Builder Visa Secured Credit Card is unique because it is a charge card tied to a direct deposit, meaning cardholders won’t have to worry about late fees or missed payments. Even better, Chime regularly reports payment history to the major credit bureaus. This regular reporting is essential for building a good credit score – fast! The Self Visa is a comparable offer that provides the same basic credit-building platform.
Become an Authorized User on Someone Else’s Account
You may find yourself in a lucky enough situation where a trusted person, usually a family member, can help you build up your credit by making you an authorized user on their credit card account. However, an annual fee may apply for your secondary card. This can affect your credit in a hugely positive manner, as you’ll be able to build a credit history without having to initially qualify for the card.
In the world of credit cards, an authorized user is a secondary cardholder for a credit card that receives a card with their own name on it. Their purchases with this card reflect on the same statement as the primary account holder and share the same credit limit.
This privileged position of trust does expose the main credit card account holder to substantial liability, as they’re on the hook to make payments for the purchases both you and they make on the card. Being a guest on someone else’s credit accounts in this manner means that your actions and the debt you accumulate can bring their score down as well, so don’t mess this up.
Becoming an authorized user means pairing up with a friend or relative with a good credit score – and probably a good credit card. Credit cards from banks like Chase are ideal for becoming an authorized user. They offer exceptional rewards, intuitive mobile apps, and quality perks.
Perhaps the best-known Citi credit cards, both the Citi Custom Cash℠ Card and Citi® Double Cash Card are ideal for adding authorized users and building their credit. They can even build up a healthy amount of ThankYou Points for the primary account holder – meaning everyone wins!
Related Article: Do Credit Card Perks Also Apply for Authorized Users?
Find a Loan Co-Signer
Unlike when you become an authorized user on someone else’s account, as a co-signer, you’ll be responsible for repaying the entire debt being taken on as well. This can be useful when trying to qualify for a loan to purchase a car or mortgage but missed credit card payments will affect both of your credit scores, and very likely put an immense strain on your personal relationship.
Consider a Credit Builder Loan
As long as you can verify to the lender that you have the income to make regular payments, a credit builder loan is another option available to you when building up your credit score. With this type of loan, you make payments into a bank account where the borrowed funds are held until the whole amount is paid. Your payment activity with a credit builder loan is reported to the three major credit bureaus, and so long as it’s positive (along with other individual factors), your credit score should rise.
Prove You’re Responsible
Ultimately, establishing a pattern of responsible financial behavior is the key to quickly building up your credit score.
- Never miss any loan or utility payment.
- Avoid opening and closing an account with a high limit, especially if you have big debts you still owe.
- Ensure you avoid incurring interest charges by paying your credit card balance off every month.
- Don’t max out your credit cards or others if they’re kind enough to make you an authorized user.
Keep actions like these in mind daily, as well as the ideas discussed above, if you want a credit score that can open doors for you sooner rather than later.
Related Article: What Are the Easiest Credit Cards for Bad Credit to Get?
Featured image by Shutterstock