Today, your credit score impacts so much of your financial life. It determines whether or not you qualify for a loan or credit card, dictates what your interest rate will be, and is a major factor considered when renting or owning any property. It may come as a surprise, then, that 1 in 10 Americans don’t have any credit history, and nearly 40% don’t have any idea how credit scores are calculated.
When it comes to establishing credit, the old adage, “There’s no time like the present,” is particularly true. The sooner you start, the better because eventually you’ll likely need credit to help you navigate through life’s ups and downs. Here are some of the best ways to start building your credit:
- Check to see if you have a credit report. Just because you don’t have a loan or credit card doesn’t mean you don’t have a credit report. A past gym membership or student loan could mean you have some sort of credit history. To see if you have a credit report, visit annualcreditreport.com.
- Open a Secured Credit Card. These cards require that you keep a certain amount of money in your account, which is the card’s credit limit — usually a low amount. After you’ve established a good payment history with this card, you will probably qualify for an unsecured card. The most important way to build good credit is to make all payments on time — it’s the main deciding factor between good and bad credit scores.
- Become an authorized user. Ask a family member you trust — one you know has good credit and who makes payments on time — if you can be added to their credit card account. Make sure that the card has a low credit utilization rate, meaning less than 30% of the total available credit on the card is being used. The longer the payment history on the card, the more you’ll benefit from your relative’s good payment history.
- Get credit for the bills you pay. Some alternative credit reports will give you credit for bills you currently pay, such as your cell phone, utility, streaming service bill, and even rent payments. You can also look into products like Experian Boost, which can help raise your credit score quickly.
- Apply for a Savings Secured Loan. A loan secured by either your Share Savings, Money Market Savings, or Certificate Account, is great for building credit. The amount of the loan is held by the credit union account until the loan is paid in full. Payments are reported to the credit reporting bureaus, helping you build a positive credit history.
For more information on building credit for your specific situation, talk to a Member Service Officer. Call 503.220.2592, email [email protected], send a secure message through Digital Banking, or stop by a branch.