What You Should Know About Building Credit
When it comes to making large purchases such as a home or vehicle, most people will need to borrow the money. The lender will want to see your history as a borrower to see if you’ll pay the money back. This is why you need to have good credit. Usually as expressed as a three-digit number called a score, your credit history impacts your ability to secure a loan with good terms and conditions. For borrowers with no credit, here are some ways to get started.
Getting a Secured Card
A secured card is one that is backed with a cash deposit that is made up front, helping you build credit without putting the risk on the card provider. As you make purchases, accrue interest and make payments, you can establish a record for other types of debt. Look for a card that has no annual fee that reports your usage to the three credit bureaus, Equifax, Experian and TransUnion.
Taking Out a Secured Loan
Consider reaching out to a bank or a lending company Louisiana for a secured loan. Similar to a secured card, the money in your account serves as the collateral for the loan. You will need to make your payments on time to establish a positive history. Some lenders offer a credit-builder loan that is expressly for creating a borrowing history.
Counting on Those You Know
You might be able to use a co-signer for a loan or unsecured card. This person ideally should have a strong borrowing history, as they’ll bear responsibility for paying back the debt if you don’t. If a loved one is willing to add you as an authorized user on an existing card, the credit history for that card becomes a part of your history, helping you to form your own score.
Building credit is a must if you ever need to borrow money. From cards to mortgages, your history as a borrower impacts the terms of your loan. Paying your bills in full consistently help you to show lenders that you’re a responsible borrower and worth the investment.