If you’re just starting out financially or if you’ve had a major financial setback, you may need to build or rebuild your credit score. Although the two situations may seem vastly different, and to some extent, they actually are very different, but the steps that you need to take are essentially the same: you have to build (or rebuild) a low or nonexistent credit score. And, if you have no credit or low credit, it’s very difficult to actually get credit.
Fortunately, there are a couple of really solid ways to get your credit score back on track.
1. Get a Secured Credit Card
Unlike conventional credit cards, secured credit cards require that you put down an initial security deposit, and once you’ve made the security deposit, they’ll issue you a card that will work exactly like a conventional credit card. You’ll have a credit limit (which is typically the amount of your security deposit), you’ll be able to use the card anywhere that you would use a conventional credit card (or debit card), and you’ll make payments on the purchases that you make with the card. And, just like a conventional credit card, your secured credit card company will report your responsible usage, payment history, and available credit to the credit bureaus. This, in turn, will help you to build (or rebuild) the two most important parts of your credit score – your credit availability and your payment history. Together these two factors make up more than 50% of your credit score, so you can see how quickly opening a secure credit card can help you to improve your credit score.
2. Open a Catalog Credit Card
Believe it or not, opening a catalog credit card account, like Fingerhut, is also one of the fastest and best ways to build (or rebuild) your credit score. You see, unlike traditional credit card companies, Fingerhut Credit is known for their extremely high approval rate (nearly everyone gets approved for a Fingerhut account) and for their regular reviews of your credit limit. That means that you’ll see your total available credit increase much more quickly with Fingerhut than you would with a conventional credit card account, and your responsible usage, payment history, and available credit will be reported monthly to the credit bureaus, again affecting those two major factors in your credit score, credit availability and payment history.
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While there are other ways to improve your credit score, these two are the fastest, easiest, and best ways to build or rebuild your credit score on your own, without having to pay someone else to work on your credit report for you. (We’ll get into those options another day, in another post.)