Building and repairing credit is easier said than done. Whether you are building credit as a recent college graduate or repairing credit after some financial mishaps, the daunting nature of a credit score can be paralyzing. While in the midst of a credit crisis, situations can seem hopeless.
Unfortunately, we live in a credit-dominated society. Big purchases such as apartments, cars, education, furniture, internet service, and cell phones require a credit history. Having bad credit leads to high fees and high interest rates, creating a cycle of over spending without the ability to afford monthly bills.
It turns out there are a few ways to build credit without getting an actual credit card, and those with bad credit should not despair. There are some ways you can build and repair credit!
Where to Begin?
It can be hard for a youngster without credit to get approved for a credit card. There is another option! You can try getting a secured credit card to build credit history. Not just any secured credit card works. Make sure your secured credit card furnisher reports to the credit bureaus so that all of the activity will actually count towards building or repairing your credit. A number of banks offer secured credit cards, where you can put money on the card that acts as your credit limit. These secured cards work differently than pre-paid and debit cards. You will receive monthly bills to pay in order to avoid penalties.
Another great option is to piggyback on a parent or spouse’s credit card account as an authorized user.
Getting Credit Cards
After building up some credit, you will likely become eligible for a credit card. It’s normal to experience some fear or too much enthusiasm when applying for a credit card. Credit cards are a lot of responsibility and can be dangerous, with high credit limits and low minimum payments.
To avoid going to into debt with your credit card, you should try to pay your balance at the end of each month. Having a zero balance is your friend, so it may be best to leave the credit cards at home if overspending is a problem.
The two biggest tips for credit card users: pay your bill on time and do not max out the card by hitting your credit limit!
Organization is a Must
The most important step in building or repairing credit is staying organized and paying bills on time. Open the bills when you receive them!
Whether you get hard copies in the mail or emailed statements, examining how much you owe allows you to budget and plan to save enough money for payments. Bills can be scary and intimidating, waiting to lunge at you with dollars and cents you do not always have. Nonetheless, you must move forward in building or repairing credit by meeting obstacles head-on.
Making late payments can only hurt your credit score. Some people find setting up automatic payments helps stay current on bills.
Check out some more helpful information and tips for building and repairing credit here.