To build credit, you have to get approved for credit.
If youve been denied for credit too many times to count, youve come to the right place.
Keep reading to learn how to build credit when you keep getting rejected.
Once youve confirmed that your credit report is accurate, youll need to start building credit.
The only way youll do so is if you have an account thats regularly reported to the bureaus.
Here are five strategies to try.
Open a Secured Credit Card
One of the easiest ways to rebuild credit is byopening a secured credit card.
You put down a small deposit say $200 or $300 and that becomes your line of credit.
Since youre putting down a deposit, the risk to the lender is minimal.
Thats why your odds of approval are much higher compared to with a traditional card.
Always keep credit card balances below 30% of your open credit.
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2.
Get a Credit Builder Loan
A credit builder loan is like a regular loan in reverse.
Typically with a loan, you get money up front and then make payments on it.
Once youve paid off the loan, you finally get your money.
Most big banks dont offer credit builder loans.
Check with a localcredit unionor anonline bankabout whether they have this option.
Making on-time payments is the No.
1 thing that will help your credit.
Yourpayment historydetermines 35% of your score.
Use a Rent Reporting Service
Your housing payment is typically your largest expense.
Your landlord may need to verify your payments.
Before you sign up, look carefully at all the fees involved.
Many services have a setup fee on top of a monthly fee.
A co-signer accepts responsibility for making payments if you fail to.
Only choose this option if youre 100% confident that you’ve got the option to make payments.
Set up automatic payments so you dont forget.
Its not just your credit on the line here.
Sometimes parents will add their child as an authorized user to help them establish credit.
Becoming an authorized user can help you establish a credit footprint.
How Often Should You Apply for Credit?
Applying for new credit too frequently can hurt your credit score.
Each app results in ahard inquiryon your credit report, which can drop your score by a few points.
A good rule of thumb is to wait about six months between credit applications.
Once you get approved, focus on making on-time payments and youll gradually see your credit improve.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder.
She writes the Dear Penny personal finance advice column.
Send your tricky money questions to[email protected].
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