credit building

Top 7 Credit Building Strategies for Better Loan Opportunities

Getting a credit card is inevitable if you want to achieve financial freedom. While many people get by fine without a credit card, it can limit your loan opportunities. Even things like staying in a hotel or renting a car can be difficult if you rely only on debit.

If you aren’t finance-savvy, getting a credit card may seem like a black hole. If you rack up bad credit, you may prevent yourself from buying a home or getting a good job. 53% of Americans were turned down for loans due to poor credit.

If you want to build good credit, check out these credit-building strategies. Some discipline and a few good habits can go a long way in earning financial freedom. Read on to find out more!

1. Start With One Credit Card

The average American gets their first credit card in college or when they’re around 20 years old. However, many make the mistake of opening too many credit accounts in a short span of time. Many first-time credit users build a collection of credit cards in only a few years.

If it’s your first time holding a credit card, stick with it. Opening too many accounts at once will make it difficult to keep up with credit reports and payments. In addition, your credit reports obtain hard inquiries whenever you apply for new credit.

Too many hard inquiries can hurt your credit score. Take the time to learn about using credit responsibly. If you think you’re ready for an upgrade, be smart about your choices and try to space out applications for at least six months per card.

2. Borrow Only What You Can Afford

Keep in mind that a credit card isn’t the equivalent of free money. Credit cards are essentially a debt instrument, and you repay the funds you use. One of the biggest mistakes people make is buying things they can’t afford.

When the credit bill comes, they’re unable to pay it back, which results in debt. Depending on your provider, you may also have to pay additional interest until you pay off your bill.

So, when you get a credit card, only borrow what you can afford to repay. This helps avoid incurring debt and lets creditors and lenders know you’re a responsible borrower.

3. Pay Your Bills on Time

Paying your bills on time is one of the best things you can do to improve your credit. Credit utilization and payment history are the biggest factors that can impact a credit score.

Start by paying at least the minimum by the due date every month. If possible, pay your balances in full. If you’re smart with your spending habits, this shouldn’t be a problem for you.

Paying on time and in full also prevents you from racking up debt. This shows creditors and lenders that you are capable of handling your money.

To ensure you pay your bills on time, you can set up a filing system or calendar alerts on your phone. This will let you know when a bill is coming up.

4. Dispute Credit Card Errors

Make it a habit to check your credit reports regularly. This will help ensure that your score is moving in the right direction and enables you to detect any errors. Credit report errors can harm your score.

If you see inaccuracies, dispute them right away with your reporting company. This could range from a creditor reporting that you missed a payment or a mixed credit report. Unfortunately, these are common credit report errors, but they’re usually easy to fix.

Prepare the necessary documents to support your dispute, as well as a form explaining what you think is wrong and why. The credit bureau has 30 days to investigate errors, so be patient. Some companies may offer to dispute errors on your behalf but beware of illegitimate credit repair companies.

Disputing errors are free because they are the mistake of the reporting company. As such, you should be able to fix your credit report without outside help.

5. Become an Authorized User

Becoming an authorized user can boost your score if you’re a first-time credit user. Look for a friend or family member with a good history of on-time payments and a high credit limit. Ask if you can add them as authorized users.

Doing this adds their account to your credit reports. This can help lower your credit utilization. You don’t even need to have access to the account number or use the card to benefit from their positive credit history.

6. Don’t Let Go of Your Accounts Too Soon

If you’re planning to upgrade, don’t be too hasty to let go of your old account. Closing old credit reduces the average age of your credit accounts. If you close an account, any good credit history you have with it won’t benefit you.

The longer you have credit, the more it will benefit your credit score. Talk to your provider to see if you can downgrade your card if you think it’s not serving you any purpose. This allows you to keep your account open, increasing your credit age and score.

7. Use a Secured Debit Card

If you have a bad credit history, getting a secured credit card can help improve your score. Secured credit cards come with an up-front cash deposit. Your credit limit is often the same amount as the deposit.

Use it like a normal credit card and pay your dues on time. As long as you stay consistent, you’ll improve your credit score within a span of a few months. Keep your balances low so you can add more positive credit history.

Credit-Building Strategies to Boost Your Credit Score

Building good credit isn’t something you can do overnight. With these credit-building strategies, you can set yourself up for better financial opportunities in the future.

If you’re strapped for cash, we can help. Eastern Loans offers quick and easy loan applications for those in need, no credit check needed. Apply for a personal loan with us today!


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