Obtaining a Credit Card with Bad or No Credit

To people attempting to enter it for the first time, the credit market can look like one enormous catch-22. A person needs credit in order to get credit, but can’t get credit until he or she has credit. Fortunately, this contradiction isn’t quite as impenetrable as it seems on the surface. Here are three ways to get a credit card with bad credit or even no credit at all.

Get a Secured Credit Card

Getting a secured card is the fastest and easiest way for people with bad or no credit to get credit cards. Secured cards allow users to put down a deposit and then borrow against it. In most cases, the deposit acts as the user’s credit limit. Once the user has shown responsible credit usage over a period of time, the card will usually be transitioned to a more traditional credit card. At that point, the security deposit is returned to the user.

Become an Authorized User on an Existing Credit Account

Another way to build credit history is to become an authorized user on another person’s credit account. An authorized user can access credit by piggybacking on the existing credit of the account holder. New credit users should be careful, though, as becoming an authorized user can have negative impacts on a person’s credit score. If the account holder’s credit score suddenly goes down, the authorized user will also take a hit to his or her score.

Use a Credit Building Loan to Establish Credit

A more long-term approach to getting a credit card is to first establish credit using a credit builder loan. These loans allow borrowers to deposit money into savings accounts on a monthly basis, then receive the deposited total back at the end of the loan term. Credit builder loans can be a bit slow compared to using a secured credit card responsibly, but they are fairly effective for establishing a positive credit history.

Any one of these three methods will allow those with bad credit or no credit to open credit card accounts. Potential borrowers should weigh their options carefully and decide which one is the best fit for their financial goals and current resources.

This article was originally published on NicholasFainlight.net

4 Tips for Improving Your Credit Score

Once you graduate college and begin your life after school, you likely realize how important a credit score is for various decisions. You may have had to deal with issues relating to your credit score beforehand, but it’s certainly something you must pay attention to now. Your credit score affects whether or not you can open credit cards, get a car loan, or get approved for a mortgage. Many landlords also want to know your credit score to see how reliable you are when it comes to making payments. You may have a low credit score or not much credit at all, but there are certainly steps you can take to build it into a respectable number. However, you need to understand that it takes time and hard work to reach an excellent score.

Open accounts with credit

For many recent graduates, you might not have much credit at all, which leads to a low score. The first step to take is opening accounts that utilize your credit; the earlier you take this step, the better. There are plenty of student credit cards out there that are easy to get approved on, or ask your parents to add you to one of theirs. Even using the card a few times a month and then immediately paying it off helps improve your credit score. Be aware that opening new forms of credit means a credit report will be pulled for you to be approved, which often temporary drops your credit score a few points. This drop is completely normal and goes back to what it should be within a few months.

Make payments on time

Something that seriously damages your credit score is making late payments. Even a single late payment on credit can lower your score. If you’ve been notorious for this issue and it’s what caused your score to be so low, change your methods starting today. Set alerts for when your payments are due or even set up automatic payments so you don’t have to worry about forgetting at all.

Regularly check your credit score

If you want to really make a difference in your credit score, you need to be aware of any changes to it, whether positive or negative. The more you familiarize yourself with the score and see fluctuations, the better able you are to make decisions that impact your finances. It’s also important to regularly check your credit score so if a fraudulent account is ever opened in your name, you can report it as soon as possible and prevent it from seriously affecting you. Credit Karma is a great resource to use and can be downloaded as an app on your phone.

Pay off debt

If you want to see immense improvement to your credit score, pay off current debt. Even paying off a single debt can boost your score several points. Make larger payments than required and avoid paying more interest than you have to. While paying off your debt, consider using the debt snowball method in order to receive the maximum benefit.