Help Your Credit

The house of your wildest fantasies just popped up on a real estate site. That car on the lot (with all the extras) would be a perfect replacement for what you’re driving now.

They’re both pretty to look at and imagine you own. If you have bad credit, though, they’re only pipe dreams.

Don’t worry, and don’t get too bummed out. Lackluster credit scores don’t have to last forever.

You can bounce back even if you’ve had late payments or run up high balances in the past.

7 Ways To Maintain Good Credit Score

It just takes patience and dedication. Give these seven strategies a try, and you’ll capture a top-notch credit score that even the credit bureaus will admire.

Maintain Good Credit Score

#1. Sign Up for a Credit Builder Card

Having a credit card is a big part of your overall credit experience. You need one for a good score. If you reach for the plastic too much and overspend, though, your score takes a dive.

Does that sound like you? If you’re nodding your head, a credit builder card could help. Cards like these are a great way to build your credit capacity and boost your credit score.

Use an initial deposit or establish a funds transfer to create a credit limit. Then, treat it like a regular credit card you can use for purchases.

Get in the habit of staying on top of payments. On-time monthly payments keep your account current and increase your score. Want to take it a step further?

Control your spending and pay the card off every month. The credit bureaus will see your solid payment history and reward you with a better credit score.

#2. Become an Authorized User

You can also use existing credit to give your score a much-needed shot in the arm. Not your credit someone else’s.

If you have a family member or trusted friend who’s willing, you can become an authorized user on their accounts. They maintain payment responsibility, but you can legally spend with their card.

Actually making purchases isn’t a requirement to build your score, however. You benefit from their payment history and score just by being an authorized user on their account.

Think of it as growing your credit score by proxy. It’s a credit boost by association!

#3. Hold on to Older Accounts

Do you have a credit card in your wallet that’s just always been there? Maybe you don’t even remember opening the account. If so, hold on to it. It offers you two big benefits.

When you apply for new credit, card companies or banks want to see long-term credit history. Accounts that are 10-plus years old show great longevity, and they bump up your score.

Plus, every account contributes to your spending limit. Old accounts usually build higher limits over time. The larger your overall spending limit, the better the credit utilization ratio you’ll have.

#4. Keep Spending in Check

About that credit utilization you’ll need to keep an eye on it. It’s the amount of the total spending limit you use. It can be tempting, but don’t treat that limit like a purchasing goal.

Maxing out cards is a surefire way for your credit to take a nosedive. Here’s how it works. For a $500 credit limit, spending $150 puts you at 30% credit utilization.

If you can manage it, that should be your max. An optimal utilization is 10%. Credit bureaus look for that because it shows good spending control and payment history.

So keep your utilization as low as you can. It can even help you secure a credit limit increase, boosting your usage ratio even more.

#5. Get a Store Credit Card

Does it seem like every store has its own credit card and they all want you to sign up? You’re not wrong, and you should apply!

Next time the clerk asks if you want the store card, fill out the application. Do keep in mind, though, that applying will likely create a “hard” inquiry on your credit report.

Typically, these cards have relatively low limits, so overspending won’t be a problem. Getting approved is also easier than a regular credit card.

That means you can start showing credit usage faster. Just remember store cards usually have higher interest rates. Pay the balance off regularly to avoid them.

#6. Keep Credit Pulls Low

When you apply for any type of credit, the lender makes an inquiry to see your credit history. It doesn’t sound like a big deal, but it does impact your credit score.

Inquiries (also called pulls) can be soft or hard. Soft ones, such as inquiries for pre-approval offers, don’t ding your credit score. Hard pulls inquiries for new accounts can each shave a couple of points off your score.

Resist the temptation to sign up for every card available while you’re rebuilding. Too many credit pulls can be a warning sign to banks and other lenders.

It can send a signal that you’re in a financial bind and make you look like a risky investment. If that’s the case, you’ll get a double whammy — denied applications and lost credit points.

#7. Take Out a Credit-Builder Loan

Building good credit can be a vicious cycle. You can’t get loans without good credit, and you won’t get good credit without loans.

This is where credit-builder loans come in. They work differently from traditional ones. You only get access to the borrowed funds after you pay the loan off completely.

You’ll build stronger credit while you’re making on-time payments, though. Smaller institutions like credit unions or community banks offer these loans.

Typically, you’ll borrow $300 to $1,000 over a six- to 24-month period. The lender deposits the borrowed amount into a bank account they control.

They report your monthly payments to the credit bureaus. In the end, you’ll have the funds and a better credit score.

Rebuilding your credit is a long-term journey. Reaching a higher score can take a lot of work. It will all be worth it, though, when your pipe-dream house or car becomes a reality.

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