Best Way to Build Your Credit

Hola bellas! Let’s talk about how to build your credit and why it’s important. Do you want a new car? Do you want to go to Coachella? Do you want to buy a house someday? You’re going to need credit unless you have the money to pay upfront.  Credit allows you to purchase and enjoy things that you can’t pay in full now, but instead pay for in monthly payments (with an interest fee).

The tricky thing is that for you to get approved for credit, you’re going to have a good credit history, but if you’ve never borrowed money, you don’t have a credit score yet.  So how do you build your credit?

Some of the best ways that you can build your credit:

• Get a secured credit card– a credit card that requires a cash security deposit. Your credit limit will be the amount you deposited.  For example, if you opened the account with a $300 security deposit, that’s your credit limit.  If you show that you’re able to pay your credit card bill on time, you’ll eventually get your deposit back.  When searching for a secured credit card, make sure to look for ones that have zero annual fees and that report to the credit bureaus Equifax, Experian, and TransUnion.  Once you’ve built your credit by proving that you can pay the money back on time, you can apply for an unsecured credit card that doesn’t require a deposit.

• Become an authorized user on one of your family member’s credit cards– by doing so, you’ll be able to use a credit card and can build your credit. Just make sure that the specific card issuer reports authorized user activity to the credit bureaus.

Also, here are some tips to earn and keep a good credit score:

Pay your entire credit card balance the same month, or as soon as you can. It will save you money from not having to pay interest.

Make all of your payments on time. You want to avoid missing payments and then having your bills sent to a collection agency.  Doing so would decrease your credit score drastically.

Keep your credit card balances low compared to your credit limit. It is one of the main factors that affects your credit score.

Keep your cards open for as long as you can. The longer the credit history of on-time payments, the better for your credit score.

Having a good credit score is extremely important to get better interest rates, to get approved for an apartment, to get approved for other loans, and eventually to get a good mortgage when shopping for the house of your dreams! Si se puede!!! (It can be done)


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