Tired of getting credit card applications rejected because of a low credit score? Are your past credit mistakes coming back to haunt you? It might feel like no matter how hard you try, you just can’t improve your credit.
This article will discuss ways to develop healthy credit habits, improve your credit score, get a line of credit, and build your financial future.
Why is Your Credit “Bad”?
Your credit score is a three digit number calculated by each major credit bureau and FICO. FICO scores are used most often by banks and lenders to decide on credit card approvals. A bad credit score tends to be lower than 600.
Here are a few factors that can make your credit score suffer.
- Late Payment history – Lenders want to see a track record of on-time payments. If you’ve fallen behind in your payments or completely ignored your debts, your credit score drops.
- High credit utilization – The credit utilization ratio compares the amount of money borrowed to your total credit limit. A high ratio may signal to a lender that you are overspending and struggling to manage your credit. Your payment history and credit usage are the two most important factors in your credit score.
- Short credit history – A longer credit history shows that you have experience borrowing money. A shorter history counts against you.
- Fewer types of credit – Lenders consider how well you manage a mix of credit sources, such as a mortgage, car loan, student loan, and credit cards. Having just one or fewer types of sources can negatively impact your score.
- New credit – Too many credit checks or newly opened accounts hurt your credit. Keep new credit applications to a minimum.
Check Your Credit Report
Fixing your credit starts with checking your credit report. You’re entitled to a free copy from each major credit bureau once every 12 months through AnnualCreditReport.com. Since each report may be different, it’s a good idea to check them all. Many banks and credit card companies will provide your credit score for free.
Complete a detailed review of your credit report.
- Check the report for errors. Confirm all the information listed, including the payment history, amount and length of credit lines, and personal information. Dispute any discrepancies or errors immediately.
- Talk to your creditors. You may be able to renegotiate the terms of your debt by getting a lower interest rate or reducing the balance due. Just make sure you get debt reduction agreements in writing.
- Payment plan – If you can’t pay your debt off in full, ask about a payment plan. Creditors just want to get paid and may be willing to accept slower payment schedules.
How To Get a Line of Credit With Bad Credit and No Deposit
If you have poor credit, you may have to put down a security deposit before getting a credit card. Even then, you can only borrow up to that deposit amount. Your best option is to understand how credit works and build up your credit score by managing a loan correctly.
Apply for a Credit Builder Loan
You can get a small loan that doesn’t need a credit check with a Credit Builder Loan. Credit Builder Loans are granted based on your income, not your credit score.
The maximum loan amount is $1,000 and does not require a down payment. Instead, MoneyLion holds some of the loan funds in reserve. You get access to some of the cash immediately. The rest of the loan stays in reserve earning interest until the loan is paid off.
To apply for a Credit Builder Loan, you must link a checking account to the app. MoneyLion scans your bank account and approves based on income.
How To Qualify for a Credit Builder Loan
Qualifying for a Credit Builder Loan starts with linking your checking account to the MoneyLion app. You must be at least 18 years old, a US citizen or permanent resident, have a social security number, and have a bank account. You are eligible with the following criteria:
- The checking account has been open for at least 60 days and is in good standing. You cannot use a savings or money market account.
- You must have a clear income stream (i.e. your paychecks or benefits get deposited there).
- Your personal information must match your linked checking account.
- The account has a reasonable balance and transaction history (at MoneyLion’s discretion)
Not everyone qualifies the first time around. If your income wasn’t consistent or you had a negative balance in your checking account, wait a few months and reapply.
What Does the Credit Builder Plus Membership Do?
A Credit Builder Plus Membership is more than access to a loan; the program teaches you about credit and can help improve your credit score.
With your membership, you may be eligible for a loan of up to $1,000 without a credit check. By making timely payments, your credit score can see a boost of up to 60 points in just 60 days.
Finally, membership helps you keep track of your credit score with updates every week through the MoneyLion app. You’ll also get access to 0% APR Instacash advances.
How Much Does the Credit Builder Plus Membership Cost?
A Credit Builder Plus Membership is designed to help you take control of your final future. The monthly fee costs $19.99, in addition to your loan payments. To encourage healthy money habits, you can earn a Lion’s Share reward of $19.99/month — essentially getting your Credit Builder Plus membership for free — by logging into the MoneyLion app every day and making 20 purchases of at least $10 per month with the RoarMoney account. Set a phone reminder to login for rewards.
How Long Will it Take To Pay Off the Loan?
You have one year to repay a Credit Builder Loan fully. Payments can be timed to your pay dates and automatically deducted. We report them to all three credit bureaus to help you build positive payment history. At any time, you can pay off the loan sooner by making extra principal payments through the app.
Open up Your Financial Future by Rebuilding Your Credit
Bad credit doesn’t have to follow you forever. Even with poor credit, you can get a small credit line through Credit Builder Plus membership without putting down money besides the $19.99 per month membership payment.
You should qualify with a steady income stream and a bank account in good standing. The membership helps you start learning how to manage and build credit. Once your credit score improves, you’ll be able to apply for a credit card without a deposit.