When it comes to personal finance, there is a lot of advice on how to save money. But what about when you’re trying to build credit?
There are many tips you can follow to help you build credit. Many of these tips, such as getting a secured credit card or taking out a personal loan, can be easy to do with a little.
Get a secured credit card
Getting a secured credit card is a great way to start building credit. With this type of card, you will need to put down a deposit that will serve as its credit limit. Then you can use the card like any other credit card, including making monthly payments. If you make your payments on time and keep your balance low, you should start to see your credit score go up.
Become an authorized user on someone else’s credit card
Another option to build your credit is to become an authorized user on someone else’s credit card. In most cases, you can ask a family member or friend with good credit to add you as an authorized user on their credit card.
When you become an authorized user on someone else’s card, you can build your credit history without having to apply for a credit card of your own. Be careful to keep your debt balance low and make payments on time though, as not doing so could impact your friend or family member’s credit score, too.
Use a personal loan to build credit
If you need a little help with building credit, you may want to consider taking out a personal loan. The different types of credit you use are important in determining your credit score.
Depending on your existing credit mix, a personal loan can help diversify your credit history. Additionally, you can use a personal loan for nearly any purpose. You can consolidate debts, make a large purchase, or use it to pay bills.
Ask for a credit limit increase
By asking for a credit increase from your credit card provider(s), you can lower your credit utilization ratio. This ratio accounts for all the debt you have compared to your credit limit. When you keep your debt low compared to how much you can borrow, it becomes easier to maintain a healthy credit score.
Create a budget
It is important to have a budget so that you can save up for unexpected expenses and have a financial safety net. You should spend a few hours every month on budgeting and set aside some money for your emergency fund. As a general rule, aim to save two months’ pay per year or until you have a year’s worth of take-home pay. Having a budget will give you peace of mind and help you avoid financial difficulties down the road.
Following these budget-friendly tips can help you build credit without breaking the bank. With a little creativity and support, you can build the credit you need to finance the life that you want.
