If creditors keep on denying your loan application because you lack credit then it is time to build it up, even if it means having to start from scratch.
Here are some of the top ways to build up your credit:
Get a credit card. For starters, pick:
- Secured credit card
- Student credit card
- Retail credit card
If you’re not sure how to begin, you can choose secured credit cards from a provider that reports the credit card to the credit bureaus. It can help you build a positive payment history and anyone can qualify.
Credit card issuers require applicants to deposit a certain amount of money to eliminate the risk of lending to you. If you’re a student and you want to start building your credit file, you can get a student credit card. It has low interest rates. But it has high interests and you cannot overuse it because of its low credit limits.
If you want to save on purchases to your favorite stores, get a retail credit card. It has low credit limit so you don’t have to worry about being caught up in a pile of debt. However always keep your debt level lower than 30% of your credit limits so you will not end up drowning your credit score. A high credit card balance plus a high utilization rate are ingredients to credit score catastrophe.
Pay your credit card in full. Avoid carrying a balance to avoid paying hefty interests on purchases, especially if they have no significant effect on building your financial portfolio. While some people think that carrying a balance on your credit card can build your credit, paying interest for consumable items or purchase that generate income is not practical.
Always pay on time. When you think about missing payment, think about its impact on your credit score. Do you want a single late payment to stay on your credit file for the next seven years? Is it too important that you will allow such purchase to wreck your credit score?
Many borrowers are in deep financial mess because they started missing payment once in a while, until it tainted their credit file. It will also be difficult to check negative and inaccurate entries ion your credit score the moment you started. While there are emergent situations that you cannot avoid, try to keep up with the payments if you can. Paying on time should be on your priority list.
Keep your debt levels low. Utilization ratio makes up 30% of your credit score. So, it will be wise to avoid using up more than 30% of your credit limit. For example, if your limit is $12000, keep your debt lower than $300. A low utilization ratio also attracts creditors because it shows that you do not completely rely on it for purchases. Meaning, you have other sources of income and you have sufficient amount of money to pay for it.
If you have messed up financially and you want to rebuild your score, Clean Credit can help you clean and repair your credit file, so you can get a clear beginning. Build your score and get the most favorable loan offers and credit card deals. Start with Clean Credit today!