Tips For Repairing And Building Credit
Building credit is a journey that will take time and patience. It is all about managing your money better. This includes paying your bills on time, watching your credit utilization ratio, getting a secured card, and becoming an authorized user.
If you do all of these things, you will be able to repair and build your credit much more easily.
How To Repair Credit
Pay On Time
If you want to know how to build credit, the most important thing to know is that you need to pay everything on time, every time.
This goes for your rent, your utility bills, and your credit card payments. Even if you can only afford to make the minimum payment on your balance, that is better than not paying anything at all.
If you cannot even afford to make the minimum payment on your balance, it is a good idea to contact your creditor and see if they are willing to make any other arrangements, even if it is only temporary.
Your payment history is the single most important factor when it comes to calculating your credit score. When you are working on rebuilding your credit, you cannot afford to have even a single late payment on your credit report.
Late payments also stay on your credit report for seven years or more. One of the reasons why it is so important to avoid them is because it takes longer to recover from a missed payment than it does from other credit mistakes.
Watch Your Credit Utilization Ratio
Another important part of building credit is keeping an eye on your credit utilization ratio. If you still have credit cards open, you should keep your balance as low as you can. Your credit utilization ratio is the percentage of your available credit that you are using, and you want to keep this number below thirty percent if you can.
The amount of available credit that you have is one of the factors that affect your credit score, so you should always try to keep your credit utilization ratio low.
You can monitor this by checking your credit report. Your credit score will not be hurt by a formerly high credit utilization ratio, as long as you bring it down below thirty percent.
Get a Secured Credit Card
A secured credit card is a tool that you can use to help you while you are building credit. These cards generally require you to pay a deposit upfront, and this is your credit limit. Once you pay this deposit, they work like any other credit card.
If you want to know how to build credit, you should get a secured credit card from an issuer that reports to all three of the major credit bureaus, Experian, Equifax, and TransUnion.
Become an Authorized User
Another option for building credit is to have someone make you an authorized user on their credit card. There are a few different ways that you can do this.
There are some credit cards that will allow the primary cardholder to set a spending limit for authorized users. This might make the primary cardholder more comfortable with the idea of adding you to their card.
It is also possible for them to make you an authorized user without actually giving you any of the card information. This means that you would essentially be able to piggyback off of the good credit habits of someone else to improve your score.
That said, there is a risk of becoming an authorized user. If the primary cardholder falls into debt or starts missing payments, you are responsible for this too. This will negatively impact your credit score.
Additionally, because you are not the primary cardholder you are not legally responsible for the debt on the card and the positive impact on your credit score of being an authorized user will be small. However, if you are looking at how to build credit, this is an option that can give you an extra boost.
Getting An Emergency Loan For Bad Credit
Rebuilding your credit will take time and patience. However, sometimes you encounter a situation where you need to borrow money immediately to cover some sort of emergency expense and have limited options because your credit is still low.
When this happens, one option that you can consider is getting help from Missouri Title Loans, Inc. You can get an emergency loan for bad credit from them by applying for an online title loan. This is a way to get fast cash based on the value of your vehicle.
Getting An Online Title Loan
When you apply for an online title loan from Missouri Title Loans, Inc. you do not have to worry about your credit score. This is because the value of your loan is based on the value of your vehicle title, not your credit score. Missouri Title Loans, Inc. is happy to accept good, bad, and nonexistent credit.
Other advantages of getting an emergency loan for bad credit include:
- There is no store visit required
- You can have your emergency cash deposited directly into your account
- You get to keep your car while you are repaying the loan
Final Thoughts
Building credit is a journey that takes patience and discipline. However, you will thank yourself when you achieve a great credit score.
Want to know more? Increase your knowledge of credit and debt here!
Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.