If you are interested in starting to build your credit score you might want to look into these few steps to get you started on the right track.
Build your credit score!
Often people graduate from university and enter the workforce without ever having given a second thought to their credit score. After years of living in a dorm they've decided to finally apply to rent an apartment. Once they submit their application they often get denied for not meeting the minimum credit score requirement. Here are five tips to establish your credit score:
Tip #1 - Download Experian
This app and webpage allows you to check and monitor your credit history. *You are allowed to monitor your credit score through this service without it affecting your score. This service will show you the up to date information any time you check your account. If you have no credit history this is going to reflect as "Un-scoreable".
Tip #2 - Apply for a Debit Backed Credit Card
When you are just starting to build your credit score it is very important to only apply for a debit-backed line of credit. The federal government has begun regulating how credit is issued in order to curb the amount of revolving credit debt. In the past anyone could apply for a line of credit and get approved instantly, now days the restrictions are higher. Previously people would be able to go into a store and make a large purchase in order to get approved for a line of credit, this is no longer the case. If you do not have a score you will get denied for every line of credit except for a debit-backed line of credit. Each time you test this theory you will see the hard inquiry appear on your credit report.
Debit backed credit means the amount of money you put into it will be the credit limit they provide you. So if you submit $200 they will give you a credit limit of $200. The $200 provided acts as a security deposit to cover the remaining balance in the event you become delinquent on the account. Make sure whichever card you apply for does not have an annual fee and allows for balance transfers if necessary.
Tip #3 - Authorized Users
One way to establish some credit history is to become an authorized user on another persons credit card. This tip is a little risky and should only be utilized if you trust the individual and can confirm they have never made a late payment. This will reflect that you are now one of the individuals responsible for the payments or charges made on the card. The past credit history of the main cardholder will help establish some repayment history. Its best if they can add you as an authorized user on their oldest account.
Tip #4 - Get a Co-Signer for a financing application
Another good way to get your credit score higher would be to get a co-signer with or without a high score. Once that co-signer with a high credit score is established on a financing application you will be able to get a boost on your score. Make sure to make all your payments on time because if you do not it will negatively affect the co-signers score.
Tip #5 - Credit Boost
Finally another way to establish a good payment history on your accounts is to register your bank account with Experian Credit Boost feature. This feature will sync your subscription, rent and utility payments from your accounts to see if you make regular payments on time. This will boost your score 5 to 10 points from where it already is and will assist in establishing a credit score. Missing a payment for one of your subscriptions will negatively affect your credit score as well. You can stop this feature at anytime, but keep in mind if opt out of this feature you will lose the boost and your account will show a decrease in your score.
Credit Scores
There are different credit bureaus which will reflect a different type of score depending on which service you use. There has been an increase in the use of Experian. Most of the property management programs I have come across have a partnership with Experian. This means their program will run a background and credit check when you submit a rental application. For the highest approval rate while you're just getting started, create a free account with Experian and build your credit score before applying for a rental.
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