Were you recently denied a loan or credit card because you didn’t have a credit score? And now you’re determined to establish credit history so you can get approved?
The good news is it’s not as difficult as you may think to build credit. But it could take a bit to get a credit score. FICO scores are used by 90% of lenders to make credit decisions and can be generated in 6 months. Or you may have access to a VantageScore, an alternative credit score, shortly after your credit activity is reported to the bureaus on your behalf.
How to Build Your Credit History
Ready to begin building your credit history? You have several options to get started and create a solid foundation that will benefit you for years to come.
Become an Authorized User
Do you have a relative or friend with exceptional credit history? Ask them to add you to their credit card account as an authorized user. If they agree, the payment history will be added to your credit profile. This helps you build credit fast and could help you get a FICO score before the 6-year window.
Confirm that the credit card issuer reports account activity to the 3 credit bureaus: Equifax, Experian and TransUnion. Also, know that you can request to be removed as an authorized user at any time.
Open a Secured Credit Card
Want a credit card in your name? Apply for a secured credit card to have access to a credit line while building credit history. The credit card issuer will require you to make a deposit that’s equal to the credit limit before opening your account.
When evaluating secured credit card products, be sure that they report to the credit bureaus. Otherwise, your account activity won’t be reported to the credit bureaus, and it won’t help you establish credit history.
If you manage the card responsibly for an extended period, the credit card issuer may convert the card to an unsecured product. You will also receive your deposit back. But if you fall behind on payments, you risk losing your deposit as the credit card issuer closes the account and applies the deposit to your outstanding balance.
Get a Credit Builder Loan
A Credit Builder Loan is another excellent option to build credit. MoneyLion offers an affordable option that can help you get started and put up to $1,000 in your pocket in just minutes.
To qualify, you need an active checking account that’s at least 60 days old and in good standing. The transaction history should also demonstrate a steady stream of income. Worried you won’t qualify because you’re out of work? Unemployment income, government benefits, alimony and child support are also considered.
There are no credit checks, and the application process is seamless. Simply download the MoneyLion app to your mobile device, link your bank account and complete the brief application. If approved, you will receive the loan proceeds in your bank account right away. MoneyLion may withhold a portion of the proceeds in an interest-earning Credit Reserve Account. When your loan is paid in full, these funds are yours to keep.
Loan payments are automatically deducted from your bank account. So, you never have to worry about missing a due date and incurring penalties. Each time a payment is processed, the activity is also reported to the credit bureaus, which helps establish an exceptional payment history.
The credit builder loan from MoneyLion is a component of the Credit Plus membership. It’s only $19.99 per month to access this loan product, and your membership also includes credit tracking, weekly credit score updates, access to 0% APR cash advances of up to $250 through the Instacash feature, and more.
Improve Your Credit Health Over Time
When you have enough credit history to generate a score, you should continue working to improve your credit health. Beyond keeping tabs on your credit report and understanding how credit scores are created, here are some tips to keep in mind:
- Make timely payments
- Keep your outstanding debt balances down
- Only apply for new credit as needed
- Don’t close idle accounts
- Maintain a balanced mix of revolving and installment debt
Take advantage of credit monitoring from MoneyLion. You will receive real-time alerts any time activity occurs in your credit profile. Plus, you can view your credit score 24/7 directly from the online dashboard.