What You Need to do to Build Credit

Written By Jeff Hindenach
Last updated December 10, 2019

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March 24, 2016

Simple. Thrifty. Living.

Having good credit is important for everything from getting a home or car loan to renting an apartment or paying for cable television services. If you already have good credit, you have no problem, but you don’t automatically get good credit the moment you acquire a credit card. It takes time to build credit, so use these tips to build a good credit history.

The easiest way to build credit is to open a credit card account. Try choosing a card that offers you some benefit, such as cash back, airline miles or a discount on gas and groceries. As long as you make regular payments each month and don’t let credit charges get out of control, you’ll start building a good credit history in six months time. If don’t have good enough credit to get a credit card, here are a few things you can do:

  • Apply for a secured credit card. These credit cards have low credit limits and often require a deposit, but they also report to the credit bureaus and will help you build credit.
  • Raise your credit score. Easier said then done, right? The best thing you can do is pay off your debt, if that’s an option. You can also try to fix any mistakes on your credit report. Lastly, you can dispute negative items on your credit reports that you think may be able to be removed.
  • Hire help. Top credit repair companies can help you file these disputes with the credit bureaus, and in fact, they are more experienced in knowing which items to dispute.

It may be hard to get a loan for a new car purchase or lease if you haven’t built credit yet. However, if someone with good credit agrees to cosign the loan with you, your chances will definitely improve. As long as payments are made on time, you’ll continue to build credit for yourself.

If you prefer not to get a credit card and don’t need a car loan, you can still build credit through a credit builder loan. The purpose of this loan is exactly as its name implies. You borrow a certain amount of money, which is held in an account by a lender, and as you pay back the loan, you build credit. Credit builder loans are usually offered by credit unions.

You may have family members or close friends who will add you to their own credit card accounts. As long as they maintain good credit, you will also build credit, even if you don’t charge anything yourself. Of course, you’ll have to come to an agreement as to what privileges you have with their accounts.

Remember, no matter how you choose to build credit, it’s important to always make your monthly payments on time. Doing so on your credit accounts, as well as other bills such as utilities, will ensure that you continue to build and maintain good credit.

About the Author

Jeff Hindenach

Jeff Hindenach is the co-founder of Simple. Thrifty. Living. He graduated from Bowling Green State University with a Bachelor's Degree in Journalism. He has a long history of financial journalism, with a background writing for newspapers such as the San Jose Mercury News and San Francisco Examiner, as well as writing on personal finance for The Huffington Post, New York Times, Business Insider, CNBC, Newsday and The Street. He believes in giving readers the tools they need to get out of debt.

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