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Ways to Successfully Manage Your Credit Utilization Rate

Managing Credit UtilizationWhen you think of your credit score, you may not consider how this number is calculated or how your actions play a role. Simply put, every credit score is made up of certain criteria, and each criteria can cause an increase or decrease in credit score. With credit utilization being one of the things that can impact your score, it may be time to learn how to manage your credit utilization.

In order to successfully manage your credit utilization rate, you’ll need to understand what it is and how it can negatively or positively impact your life. 

What is credit utilization rate and how is it calculated?

Credit utilization rate is a number used to compare the amount of debt you owe to the amount of credit you have available. By dividing the amount of credit that you use by the amount of credit available, you can determine your credit utilization rate. The more of your available credit you use the higher your credit utilization rate.

For example, if you have several credit cards, one with a credit limit of $500, one with a credit limit of $200, and another with a credit limit of $300, your total available revolving credit amount is $1,000. If you use $400 of the $1,000 of available credit, your credit utilization rate will be 40%. Whereas if you were to use $100 of your available credit, your credit utilization rate would be 10%.

Why does your credit utilization rate matter?

Credit utilization is one of the many factors that can affect your credit score. It actually makes up 30% of your FICO credit score, which means it is one of the most important factors that influence your credit score. Depending on the number, creditors and lenders may or may not approve your application. This is because your credit utilization rate is another way for creditors and lenders to measure your ability to manage your finances.

If you have $2,000 of revolving credit available to you between one or multiple credit cards, in order to keep your credit utilization at or below 30%, you’ll want to use no more than $600 if you don’t want to see your credit score drop significantly.

Managing your credit utilization

Since your credit utilization rate accounts for 30% of your credit score, you want to pay close attention to this number to ensure it doesn’t start to negatively impact your score. This is especially true when you want to improve your score to increase your chances of being approved for things that require good credit such as applying for a home loan or apartment.

You can successfully manage your credit utilization rate by:

  • Increasing your credit card limit
  • Paying your credit balance in full instead of just the minimum balance
  • Keeping credit accounts open even when there is little to no use
  • Pay down debts
  • Actively monitor your credit usage

Keep in mind that the goal of managing your credit utilization rate is to keep it at 30% or less. This doesn’t mean that you have to completely stop accessing your revolving credit, but you want to do so responsibly if you don’t want to see your credit score suffer.

For credit repair assistance and financial advice, contact Credit Absolute today for a free consultation!

Source: creditabsolute.com

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The Case to Apply for AmEx Platinum & Citi Prestige

Some people avoid signing up now for premium credit cards due to their benefits being centered on travel, something most of us are doing little these days. We can hope that as the year progresses travel will become something more and more feasible.

There were recent card enhancements on the AmEx Platinum card and Citi Prestige card which caught my eye from a purely cash perspective.

  • The American Express Platinum consumer card released a new offer to get $30 per month on Paypal transactions, and the offer is valid through June 30. If you signup now, you should be able to get six $30 credits. That’s an easy $180 to help increase the value of the Platinum card, or you can think of it as offsetting the $550 annual fee. The case for the Platinum card is especially compelling given the amazing signup bonus, still ongoing, of 100,000 points with $5,000 spend + 10x at grocery/gas for 6 months (or even 125,000).
    • Of course you’ll also get the $200 airline incidental credit twice, and the Uber & Saks credits as well.
    • (There are also free money AmEx Offers on the personal Platinum for $100 at Best Buy, $100 at Home Depot, $60 at Wine Insiders, $50 at Home Chef. However, from what I understand, it’s stated clearly that all of these offers are only for cardholders who had their cards before 11/1/2020, so probably won’t work for new cardmembers.)
  • The Citi Prestige $250 annual travel credit will be able to be used at grocery and restaurants through December 31, 2021. Most people consider these categories to be almost as good as cash versus the typical travel category where some might struggle to use. Interestingly, the Prestige card resets the $250 based on your December statement date, not based on December 31. If you signup for the Prestige anytime throughout this year, you should be able to get in both your 2021 and 2022 credits under the grocery/restaurants categories by spending $250 there before your December cutoff date and $250 between your December statement close and December 31, 2021. The $500 in credits during the first year more-than-covers the annual fee of $495.

(Some of the above thinking could have applied in prior months as well due to the streaming credits, etc. I’m writing this simply from a forward-looking standpoint.)

A lot of people will want to go for the Platinum due to increased signup bonus + $180 in credits, and to leave the Prestige for the time being until you’d be able to make better use of the benefits.

Someone who struggles to use the $250 Prestige travel credit might want to signup for that card as well. There’s no rush on that as we now know the credit categories are expanded through December 31. So you can wait a while to see if any better signup offer comes throughout the year and apply then. The Prestige card comes with a signup bonus of 50,000 points. (Note: the Premier card has a higher bonus of 60,000 points.)

Likewise, it could be an interesting time now to upgrade your Green/Gold card to Platinum. And later this year it’s worth contemplating an upgrade on your Preferred/Premier card to Prestige.

Source: doctorofcredit.com

Prepare for Holiday Shopping with These Timely Credit Tips

October 29, 2020 &• 5 min read by Constance Brinkley-Badgett Comments 0 Comments

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According to a YouGov Parent Survey in 2019, a quarter of parents entered the 2019 holiday shopping seasonstill paying down debt related to 2018 holiday spending. Deloitte numbers put holidayretail salesgrowth in 2019 at 4.1% year-over-year. In 2020, Deloitte predicts growth of between 1% and 1.5% year-over-year for the holiday season.

It might be that some people no longer want to pay for holiday gifts, decorations and food a year down the road. But it’s also true that the COVID-19 pandemic has hit consumerwallets and some people might be cutting back this year.

That doesn’t mean that people aren’t shopping. Google and other thought leaders note that changes to shopping habits and the need for social distancing and other measures will likely spread the holiday shopping season out longer. Shoppers are also likely to turn to online shopping.

With a ton of shopping opportunities, a longer holiday shopping season and pent-up pandemic energy, it might be easy to overspend and create debt you’ll deal with into the future. Follow these tips to prepare for holiday shopping so you can protect your financial standing, save money and make the most of the resources you have this season.

1. Check your credit scores

Begin by checking your credit scores and reports. They tell you where you stand if you want to apply for credit. They also give you a baseline of where you are so you know if your score goes up or down later with no explanation.

An unexplained drop in your credit score can be a sign your financial information is compromised. Unfortunately, the holidays are prime time for many scammers. Using a service, such as ExtraCredit’s Track It feature to keep tabs on 28 of your FICO scores, helps you know when you need to act to protect your credit.

2. Ask for a credit limit increase

If you have existing credit cards and you’re a cardholder in good standing, the months prior to the holidays can be a good time to ask for a credit limit increase. You’re not asking so you can spend more-it’s typically advisable to keep spending in line with your budget no matter how much credit you have.

You’re asking for a higher limit so you can spend what you already planned to without hurting your credit utilization. Credit utilization is the second-most important factor in determining your credit score-second only to payment history. It’s the ratio between your credit limit and how much of that credit you have used.

If you have a card with a limit of $1,000 and you spend $300, that’s a utilization rate of 30%. But if you get approved for a credit limit of $2,000 and you spend $300, that’s a utilization rate of only 15%, which is better for your score.

3. Apply for a credit cardwith a 0% APR introductory offer

Those with good or excellent credit might want to consider applying for a card with a 0% APR introductory offer. If you qualify for such a card, you typically have one or two years to pay off purchases made during the introductory period without accruing any interest.

This can be a way to finance your entire holiday without paying anything more for the privilege of doing so. However, it’s still important to maintain your budget and not overspend just because you won’t be paying the balance off until later. Otherwise, you make this season’s holiday festivities next season’s problem.

4. Pay down debt before-and after-the holidays

Speaking of last season’s debt: If you can pay it down before you start spending this season, that’s a great accomplishment. It also frees up your credit and your budget so you can better enjoy the current holiday season. If you’re paying $100 a month on your debt, that’s $100 a month that might go toward gifts or celebrations that you don’t have to put on a card this year.

If you do use credit to pay for the 2020 holidays, have a plan for paying it down as soon as possible. That’s especially true with 0% interest cards. The longer you wait, the greater the chance you’ll miss the introductory period and potentially be on the hook for a lot of interest expense.

5. Create a holiday spending budget

Whether you’re using cash or credit-or a mix of both-enter the 2020 holiday shopping season with a plan. Take an honest look at your personal budget. If you don’t have a budget, create one before you move forward. Then decide how much you can realistically spend during the holidays.

Consider which gifts you want to buy and which events you want to host or attend. You might not be able to do everything, and that’s OK. Be honest with yourself, your family and your friends about what you can afford to do with your time and money this year.

Then make a list and assign each item a monetary budget. That can include:

  • Gifts as a total
  • Gift extras, such as wrapping and tags
  • Shipping, both for receiving items you buy and for shipping gifts to others
  • Food and drinks
  • Travel
  • Decor
  • General festivities, such as tickets to holiday events

Once you assign a dollar amount to a category, stick to it. That’s a good idea even if you’re spending with credit.

6. Align budgeted spendingwith credit cardrewards

Once you know how much you want to spend, decide how best to spend it. If you’re using credit cards for the holidays, check your accounts to see if any offer cash back or rewards points. If they do, double-check which categories or stores you can shop in to earn the most points with each card.

For example, some travel rewards cards offer 6x points when you shop at supermarkets. You could use such a card to cover the food-and-drink portion of your holiday budget and reap the biggest rewards possible from that spending. You might also be able to maximize rewards when purchasing gift cards.

7. Guard your financial information and identity

As you enjoy holiday shopping, be on guard. Don’t use debit card PIN numbers unless you have to, and shield the keypad when you enter your information. Keep a close eye on your wallet or purse, and check your credit card statements regularly to ensure all charges are yours. You can also use ExtraCredit’s Guard It feature to help keep your identity and account information safe during and beyond the season.

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How Does a Line of Credit Work?

How Does a Line of Credit Work? – SmartAsset

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When it comes to borrowing money, you have a few options like loans and credit cards. With a loan, you receive a lump sum all at once. You then have to repay that amount, plus interest over time. You also have the option of taking out a line of credit from a bank or credit union. A line of credit is more similar to a credit card than to a loan. Let’s take a look a how a line of credit works exactly.

How Lines of Credit Work

A line of credit works like a credit card. You receive a set credit limit and your borrow money as you need. You can get a line of credit in a wide range of amounts, whether you need $1,000 or $100,000 or more. This is different from a loan, where you receive a lump sum all at once and pay it back over time. With a line of credit, you get to spread out your usage over days, months or even years. You only have to repay what you’ve actively borrowed.

For example, say you need some extra money to make some home repairs. A loan would give you $10,000 upfront (if you qualify). You almost always have to start repaying that immediately. On the other hand, you can get a line of credit for $10,000 if you think you’ll need that much. You can borrow whenever you need, say for a new roof one month and then a new kitchen the next. You don’t even have to borrow the entire $10,000 if you need. This can help you borrow in smaller amounts which makes it much easier to pay back.

Just like credit cards, lines of credit also carry interest rates. Your credit report will determine the rate and the amount of the credit line. This rate determines how much your debt grows over time. However, the rate only applies once you’ve actually borrowed and spent the money. Simply having a line of credit won’t accrue interest if you haven’t spent any of it.

To access your line of credit, you can write a special check, on the institution’s website, over the phone or in person at an institution’s branch. This is during your “draw period.” You’ll then pay back the money you borrowed, plus interest, during the “repayment period.”

How to Get a Line of Credit

Just like with any credit application, you’ll need to provide the lender with your personal and financial information. This includes your Social Security number, date of birth, home address, employment information, income and more. Often, it’s not enough to list the information. You’ll need to provide proof this information like pay stubs.

Lenders will also look at your credit score and credit report. They want to ensure you’re safe enough to lend to. If you have a history of making late payments or going into debt, you probably won’t qualify for a line of credit. This is especially true since lenders never know when you will actually borrow from the line of credit.

Managing Your Line of Credit

The beauty of a line of credit is that you have it there when you need it. But if you don’t borrow from it, you don’t have to pay a penny of interest. It can be used for home or car repairs, a wedding, college expenses and more.

As with any other type of credit, you should only borrow what you absolutely need. It’s equally as important to pay it back as agreed. Review your bill each month and, if you can, make more than just the minimum payment. If any extra money shows up in your budget, like a raise or a bonus, put that money toward the loan. To stay on top of your payments and avoid accruing too much interest, you might want to automate your payments directly from another bank account.

Should I Get a Line of Credit?

Lines of credit are good for upcoming big purchases where the total cost isn’t entirely known. Home repairs are a good example since unexpected costs do tend to spring up. You may also open a line of credit associated with your checking account if you anticipate running into overdraft fees and costs.

You’ll also want to review the fees and rates that may come with a line of credit. Fees can often includes late fees, fees for accessing your account and application fees. There may also be closing costs when you close the deal. Plus, interest rates tend to be higher for lines of credit. They’ll go even higher if your credit isn’t up to par. This will vary from institution to institution so be sure to check the paperwork or ask a representative.

Finally, it’s important to only ever borrow money when you can afford to pay it back. This means not only what you borrow, but any fees and interest you may accrue. Excessive borrowing can get you into serious trouble and debt.

Bottom Line

Lines of credit can really come in handy when you have a big purchase in the future, but you don’t know the exact cost. They allow for much more flexibility in borrowing and repaying the amounts. Plus, if you’re responsible about it, you’ll end up borrowing and repaying much less than you would with a regular loan. Just always remain aware about any fees, rates and due dates so you can stay on top of your finances and debts.

Tips for Staying out of Debt

  • The key to staying out of debt is simply to spend and borrow what you can afford. That way, it will be easier to pay back on time and in full so you don’t incur any late fees or accrue any interest.
  • If you feel yourself about to fall under a pile of credit card debt, you have the option of transferring that credit card balance to a balance transfer credit card. That will give you some time to pay back that amount at no interest. You’ll have to do so quickly, though, before the promotional period ends.

Photo credit: ©iStock.com/andresr, ©iStock.com/vm, ©iStock.com/bill oxford

Lucy Lazarony Lucy Lazarony has been writing about personal finance for more than a decade. Lucy’s a credit card expert. She is a freelance writer and award-winning journalist living in South Florida. Lucy earned a bachelor’s degree in journalism from the University of Florida. Her work is featured on Credit.com, CardRatings.com, MoneyRates.com and Art Hive Magazine.
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Tips For Getting The Most Out Of Your Credit Cards

I‘ve always been a proponent of using credit cards sparingly on this site. I believe when you depend on credit too much, it can quickly become a crutch and an excuse for poor planning.

With that said, I do believe there is a place for the responsible use of credit cards, especially if you’re paying them off with cash on hand every month.

If you do your research, make a plan for your credit card spending and play the game responsibly, credit cards can be a useful tool.

So what are some things that you can do in order to get the most of out of your credit cards?

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credit cards to sign up for, it pays to take the time to first sit down and think about how you’ll primarily be using the card.

Is the card going to be mainly used for everyday expenses like groceries and gas?  Is it a business card to be used for business expenses?  Do you plan on doing a lot of travel?

Think about how you’re going to be spending, and what type of a card – and card benefits – will be the best for you.

tips for getting the most out of your credit card

tips for getting the most out of your credit cardIf you’re going to be doing a lot of travel, you may want to consider signing up for a travel rewards card with mileage signup bonuses or other travel perks.

If you just want to get cash back, do your best to find the card with the best cash back percentage.

Don’t Just Dismiss Cards With An Annual Fee

When shopping for cash back cards some experts will often tell you to eschew signing up for credit cards with an annual fee. But according to David Rubenstein of CreditShout.com, that may be short sighted.

On a recent episode of the Money Mastermind Show (above) he gave a good example, of when this might be the case.

The American Express Blue Cash Everyday card is a good card for those looking to save money on their groceries.  You can get 3% cash back at grocery stores.  The American Express Blue Cash Preferred card, however, gives 6% cash back at grocery stores, but carries with it a $75 annual fee. At first glance many people would avoid the Preferred card because of the annual fee, but if you spend just $2500 at the grocery store in the year (versus 3% cash back version), you’ll make back the annual fee and be in the black after that. Most people, even singles, would likely reach that threshold.  Add to that the cash back you would earn in other categories and it seems the annual fee may be worth it if you spend enough at grocery stores.

Try Negotiating Out Of An Annual Fee

If you want the benefits of a card with an annual fee, but don’t want to pay the fees, there is another option that some have suggested. Negotiate your way out of the fee.

Many cards will waive the annual fee in the first year, but in the second year you’ll have to pay unless you do something about it.   Here are some ideas for how to get the fee waived:

  • Call customer service: Just call and ask nicely for the fee to be waived.  Be firm, but polite, and be willing to cancel the card if they won’t credit the fee. Sometimes the first or second customer service rep may not be able to waive it, you may need to talk with the cancellation department.  Sometimes if the fee can’t be waived, they can offer extra points or rewards which will offset the fee. Sometimes they will offer to downgrade you to a lesser card without a fee.  If you can’t get the fee waived this way, try the next tip.
  • Reach out on social media: If calling doesn’t work, another trick to try is to try talking with the company on social media. Often their social media teams are able to help give customer service and positive PR on social channels. Follow the company’s social media accounts first, and then tweet to them mentioning how disappointed you are in the fee. Often they’ll offer to help you out with the fee that year, or even suppress it moving forward as one colleague told me they did for her.  I’ve found that the more followers you have, the more receptive they are to helping you out.
  • Use un-redeemed rewards to pay the fee: If you have more rewards than you’re using, some cards will allow you to redeem those points to offset the cost of the annual fee.

Credit card issuers often spend hundreds of dollars to acquire new customer, and it’s usually in their best interest to keep you around if they can.  If all else fails, be willing to cancel the card, and sign up for another one that won’t charge a fee (at least in that first year).

Make Sure To Make The Most Of Your Rewards

When signing up for your card, it’s important to make sure you’re getting the most out of your rewards.

Experts at Consumer reports found that cash back cards tend to offer better rewards in general.  They also found that with cards that give points, often end up not using the points. In most instances, getting a cash back card will help you to optimize your returns.

Here are some other tips to make sure you’re getting the most out of your credit cards:

  • Find the best bonuses: Take your time to research which cards have the best bonuses.
  • Find the best fit: Sign up for cards with bonuses that fit your needs.
  • Find extra bonuses: Add authorized user if it will give additional bonus.
  • Find your card’s shopping portal: Shop at credit card reward portals to get extra savings.
  • Find bonus rewards: Take advantage of bonus rewards deals that will give you extra cash back during certain months or rewards periods. For example, 5% bonus cash back categories at chase freedom.
  • Find cards and programs that work together: A strategy some folks will use is to couple up credit cards with one issuer, or with compatible cards to maximize their rewards. For example, if you have the Chase Freedom and Chase Sapphire Preferred cards, you can use the 5% bonus categories and the Chase Ultimate Rewards site for redeeming the rewards to maximize your points. You could use your Chase Freedom to get 5% cash back rewards and then transfer those points to your Chase Sapphire Preferred card through which you could redeem at a rate of 1.25 cents per point for travel on the Chase Ultimate Rewards site. Or if you’re a travel hacker, transfer those points to a frequent flier program to get better deals.

Maximizing Your Spending To Reach Bonus Spending Goals

Often when you sign up for a credit card with an attractive bonus, you have to reach a spending goal within a certain time frame, like $3000 in the first 90 days, or something along those lines. Sometimes that can be tough unless you get creative.  One way to reach those goals is to use credit card rewards to pay for things you’re buying now anyway.

  • Pay medical bills: This is one I hadn’t thought of before because we use our HSA card to pay medical bills. Instead, use the credit card for rewards, then ask for a HSA reimbursement later via your HSA online account.
  • Buy groceries & gas: Most people are paying for groceries and gas anyway, why not put it on the credit card and then pay it off?
  • Pay for recurring bills: Use your credit card to pay Netflix subscriptions, cell phone bills, life insurance payments and any other recurring bill if you can.
  • Part of a car purchase: In buying a car recently I found that you can put a portion of a car purchase on your credit card.  Most dealerships will not allow you to put the whole purchase price on the card because of transaction fees they have to pay, cutting into their margins, but in many cases they’ll allow you to put $2000-5000 or so on a credit card. Just make sure you have the cash to pay it off!
  • Buy gift cards:  One creative trick some people will use to get around spending goals is to buy high dollar gift cards to reach their spending goal – that they can use later on.  To double up they’ll often buy those gift cards at places like grocery stores where they get extra cash back since sometimes those purchases will show up as “grocery” spending.

Don’t Forget To Take Advantage of Perks

Most credit cards these days have some pretty awesome perks that you can take advantage of. So what are a few?

  • Price protection: Many credit cards now have some sort of price protection built in that allows you to submit a request for a refund if an item you buy with the card drops in price, during a certain time-frame.
  • $0 liability for fraudulent purchases: Having experienced credit card fraud recently I don’t take this one for granted anymore. Having that fraud backstop there is a lifesaver.
  • Extended warranties: Many cards will offer an extended warranty on items that you buy, usually doubling the original warranty of an item.
  • Trip cancellation insurance coverage: If you booked a trip using your card, you can often be reimbursed if your trip has to be cancelled for some reason.
  • Lost luggage coverage: One of my cards gives $3,000 in lost luggage coverage for me and my dependents when the fare was charged to my card.
  • Roadside assistance: Broken down on the side of the road. Many cards offer roadside assistance at no charge, which means you can leave that coverage off your insurance.
  • Car rental insurance: Decline the car rental company’s collision, loss/damage waiver insurance if your card already has this type of coverage.  Why double up?

These are just a few of the benefits that some cards will have. Just make sure you check what perks your card has – and don’t forget to take advantage of them!

A Credit Card Should Fit Your Needs

When it comes down to it, credit cards are a tool. As long as you’re finding the right card for your situation, taking advantage of the rewards and not allowing yourself to carry a balance month to month, using a credit card can be a great benefit.

If, however, you find that you’re becoming lost and unorganized in a maze of points, restrictions, spending goals and so forth, it may not be the right thing for you.

Make sure that the credit cards you sign up for are working for you, and not against  you.

Have any of your own tips for making the most of your credit cards? Tell us in the comments!

Source: biblemoneymatters.com

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How to Build Credit Without Student Loans

June 6, 2016 &• min read by Jeanine Skowronski Comments 0 Comments

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College graduates saddled with student loans may find this hard to believe, but there is one upside to having to pay back all that debt: It helps you build credit.

That may seem like a small consolation — particularly if the balances you owe are even average — but credit can be hard to come by. Of course, all hope isn’t lost for those who don’t have student loans.

Here are some ways to build credit without that kind of debt.

1. Get a Secured Credit Card

The Credit Card Accountability Responsibility and Disclosure (CARD) Act prohibits lenders from giving credit cards to anyone under 21 who doesn’t have a willing co-signer or a demonstrated ability to repay, but if you’re over that age or you have a source of income, you can apply for some entry-level plastic.

Secured credit cards — which require you to put down a deposit that serves as your credit line — are specifically designed to help people repair or build credit. These cards generally require a deposit to “secure” the limit of the credit card. (You can go here to learn more about the best secured credit cards in America.)

There are also student credit cards geared to young borrowers that could be worth considering. The better ones have low credit limits that can keep new borrowers out of trouble and tout rewards or alerts designed to build smart-spending habits.

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2. Become an Authorized User

If you can’t qualify for a credit card, you may want to see if a parent, guardian or family friend is willing to add you as an authorized user to one of their credit cards. Authorized users aren’t responsible for paying off an account, but will get credit (pun intended) for any good activity associated with it. Just be sure to have the primary cardholder check if the issuer reports authorized users to the major credit bureaus, since not all of them do so.

3. Take Out a Credit-Builder Loan

An alternative to starter credit cards, credit-builder loans, offered by some credit unions and banks to help people improve their credit, allow you to borrow a nominal amount (often $1,000 or less) and make payments for 12 to 24 months. The payments are deposited in an interest-bearing CD or savings account. These loans typically have relatively low interest rates and can help people with a thin credit history develop a more solid credit profile as long as on-time payments are reported to the three major credit reporting agencies. (Again, you may want to check this ahead of time.)

4. Apply for a Personal Loan

You may be able to qualify for a personal loan. These installment loans do not require collateral and typically have slightly higher interest rates than secured loans. A bank or credit union that you have a relationship with may be willing to extend financing, though you may be asked to get a co-signer.

5. Establish Good Habits

Of course, you’ll only build good credit if you use any financing you are able to obtain wisely. You can establish a good credit score over the long term by making all your payments on time, keeping debt levels lower than 30% (ideally 10%) of your total available credit limit(s), and adding a mix of credit accounts (revolving lines, like credit cards, and installment loans, like an auto loan) as your score and wallet can handle them.

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You can track your progress by viewing your two free credit scores each month on Credit.com. If you make a misstep, you may be able to fix your credit by disputing errors on your credit report, identifying your particular credit score killers and coming up with a game plan to address them.

More on Credit Reports & Credit Scores:

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I Don’t Need a Credit Card But Want to Build Credit. What Can I Do?

July 22, 2016 &• min read by Constance Brinkley-Badgett Comments 0 Comments

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Good credit is essential if you hope to borrow money one day for things like a new car or home. But good credit can also be important for smaller things like renting an apartment or even landing a new job. And one of the easiest ways to build the credit necessary for these things is by getting a credit card.

If you have no credit, or even bad credit, and you’re averse to getting a secured credit card to help improve your credit, there are other ways to go about establishing and building good credit.

Here are three other options for building credit and improving your credit scores.

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1. Get a Credit-Builder Loan

A credit builder loan is a loan with a set amount you pay back over a set period of time (referred to as an installment loan). Most have repayment terms ranging from six months to 18 months, and because these loans are reported to one or more of the three national credit reporting agencies, on-time payments will help build up your credit.

Here’s how it works: A lender places your loan into a savings account, which you can’t touch until you’ve paid it off in full, allowing you to build credit and savings at the same time. And because loan amounts for credit builder loans can be quite small (just $500) it can be much easier to make monthly loan payments.

Credit-builder loans are best for people with no credit or bad credit. But, if you have good credit but don’t have any installment accounts on your credit report, a credit-builder loan could potentially raise your score since account mix is another major credit-scoring factor.

2. Pay Your Rent 

If you’re in the process of moving or need to do so in the near future, it’s a good idea to find a landlord who reports your rent payments to the major credit bureaus. Depending on what credit report or credit score is being used, these on-time monthly rent payments can give you a quick and easy credit reference and help you qualify for a loan (or at least another apartment down the road).

3. Become an Authorized User

Asking your spouse, partner or even your parent to add you onto one of their accounts as an authorized user could give your credit a boost. If the account they put you on has a perfect payment history and low balances, you’ll likely get “credit” when that account starts appearing on your credit reports. You won’t necessarily need to use the card to benefit from this strategy. It is a good idea to have your friend or family member check with their issuer to be sure that it reports authorized users to the three major credit reporting agencies (not all do).

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Remember, one of the most important things in building good credit is making timely loan and bill payments. Bills like rent or utilities may not be universally reported to the credit bureaus, but if they go unpaid long enough, they can hurt your credit, especially if they go into collection. (You can see how any collections accounts may be affecting your credit by viewing your two free credit scores, updated every 14 days, on Credit.com.)

If your credit is in rough shape, due to a collection account or other payment history troubles, you may be able to improve your scores by paying delinquent accounts, addressing high credit card balances and disputing any errors that may be weighing them down. And remember, you can build good credit in the long term by keeping debt levels low, making timely payments and adding to the mix of accounts you have as your score and wallet can handle it.

[Offer: If you need help fixing your credit, Lexington Law can help you meet your goals. Learn more about them here or call them at (844) 346-3296 for a free consultation.]

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