Desk of someone working on building their credit with laptop, cash, bills, and a calculator
Money Management, Article

How To Build Credit

Your credit score is important because it can affect where you live, work, and even how much you pay for goods and services. When you rent a home or apartment, most landlords require a credit check and may refuse to rent to those with poor scores or reports. Lenders also check your credit to determine your qualification for a loan or credit card, and the interest rate you’ll have to pay on them.

If you don’t have a credit history, or might have a low score, and thus, are having trouble getting approved for services, there are ways to build or improve your credit score!

Authorized User

Becoming an authorized user on another person's credit card account (such as a parent/guardian or spouse) can positively impact your credit score if they have good payment history. When you’re an authorized user, you receive a card issued in your name that links to their account. You can benefit from sharing their credit history with that card-issuer even if you don’t use the card issued in your name. While the primary cardholder is ultimately responsible for the payments, if you do use the card, you should reimburse the primary cardholder for any expenses you incurred to build responsible credit habits.

Extra Credit Services

There are services available that can scan your bank account for consistent payment history of bills that may not be automatically reported to the credit bureaus, and add them to your credit history. These payments might include mobile, internet, cable, utility bills, and subscriptions. Experian (one of the three major credit bureaus) offers their service Experian Boost® for free.

Put Bills in Your Name

To assist with the services that scan your bank account for consistent bill payments, make sure to put the bills in your name for credible tracking and history. It’s especially helpful to make sure your mailing address associated with your service accounts is always current. Bills to put in your name can include mobile, internet, satellite and cable, water, gas, electricity, auto and renters insurance, and other payments that are billed monthly.

Pay Your Bills

One of the best things you can do for your credit score, whether it’s a credit line or your monthly utility bills, is to promptly pay your bills by the due date, and never miss a payment.

Renting and Reporting

Another way to build good payment history is to put your name on your rent lease (whether you live alone or are on the lease along with your roommates) and ask landlords to report your on-time payments. The landlord would need to use a reporting platform that works for each of the three major credit bureaus. While reporting may benefit renters in boosting credit scores, it may also benefit the landlord by encouraging on-time payments from all renters.

Secured Borrowing

A secured credit card or secured personal loan is easier to obtain with a low credit score since you borrow against money you already have. The financial institution you open one of these products with may check your credit report or consumer disclosure report to ensure there isn’t a negative history but simply a low credit score will not affect the approval since your credit limit or loan will be insured by your security deposit or savings.

Orange County’s Credit Union’s knowledgeable Associates can help you with a plan or pair you with the right products to boost your credit. Explore our products below. If you want more information or need assistance, book an appointment online or call us at (888) 354-6228.

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