There are ways to establish credit without out jumping head first into it. Below you will find a few ways to slowly immerse yourself into the world of credit or help improve your score.
Open a checking or savings account: Establishing a relationship with a financial institution can help when trying to establish credit. By doing this you can also maybe take advantage of some the products your financial institution may offer. Some lenders ask to see bank statements to show your savings and spending habits prior to making the approval for a loan. Credit unions are a great alternative to traditional banks and usually have membership perks.
Apply for a secured credit card: A secured credit card is backed by a cash deposit equal to your credit limit that is paid up front. Although you are paying a deposit, a secured card is still used in the same manner as a traditional credit card. You can still: buy items, make payments, and incur interest if the balance is not paid in full. The deposit is refundable once the account is closed, but if payments are not made the deposit will be used as collateral. Remember, the purpose of a secured card is to jump-start your credit so you can qualify for a traditional credit card.
Become an authorized user on another person’s credit card: This is a great way for a family member or significant other to help you in your journey to establishing credit. As an authorized user, you will have access to the card while building your credit. This is a good way to build your credit because you are not legally obligated to pay for the charges against the card. If you are going to take on the responsibility of swiping for purchases, be sure to create a game plan with the primary account holder on how to reimburse them.
Use your rent payment history: Most landlords do not report positive rental history to credit agencies, but there are companies that you can use to report it for you. If you are a renter, paying rent is already something you are doing. Why not use it to boost your credit score? Try out Credit Karma or ask your landlord if they can start reporting your monthly payments for a small fee.
Pay off old debts: Remember that small unpaid balance from your previous landlord or old credit card? Those debts still show up on your credit report and can affect your score. You get 1 free credit report per reporting agency per year. Equifax, Experian and TransUnion each have their own reporting systems but ultimately include similar information. Be sure to check your report every year, since it can help alert you to old unpaid accounts or fraudulent identity theft.
Building and maintaining a good credit score is vital to future financial purchases like buying a car, house, or applying for loans. Many landlords and employers also run credit reports that can affect your application status. Small, positive steps over time can help establish credit and improve your score without making major life changes. You have the power!
Every now and then some of us find ourselves in a situation where we need help paying rent. If you’re in a situation where you cannot borrow from family or friends, try using the options listed below to get financial assistance if you ever find yourself in a bind.
- Talk to your landlord: Some landlords will allow for their tenants to do what some refer to as a “Promise to Pay” where you make a special payment plan outside your normal lease agreement. This may seem embarrassing, but do not count out this option, especially if you have been a good resident. Your landlord may surprise you and give you a payment arrangement.
- Society of Saint Vincent de Paul: This organization offers a wide variety of assistance programs. They have a Homeless Prevention program that will offer a solution should you find yourself evicted. However, before you get this point they do offer to pay a portion of one month’s rent if you qualify. If they do not have the resources to help you, they will assist you in finding another organization that can help. http://www.svdpusa.org/Assistance-Services
- Modest Needs: Is a non-profit organization that offers grants to individuals who are employed but find themselves one paycheck away from a crisis. You can apply to receive a grant with no strings attached, it is purely granted to you because you are in need. However, there is an application involved along with the submission of additional documentation to determine if you meet the qualifications. https://www.modestneeds.org/
- Till rental loan: Our rental loan lets renters borrow one month’s rent up to $2,000, providing an easy way to avoid the additional fees that come along with nonpayment of rent (late fees, dispossessory fees, attorney fees, etc.). Apply online at HelloTill.com/Loan and receive a decision within 24 hours. You will be required to submit income documentation to qualify. The loan repayment schedule will be given to you in advance along with the flat bi-weekly repayment amount. Till even pays the rent to your landlord directly, making it hassle-free to you as the borrower.
In the end, you as the renter should determine the right approach for your situation. Timing means everything, and it is better to not wait until the last minute to seek assistance. There are so many options out there for you whether it is in the form of a loan, grant, or government assistance. These options are just a glimpse and hopefully a starting point to guide you in the right direction.