Good credit is important for so many reasons. From securing a job to buying a house, your score can have an impact on the rest of your life. That’s why it’s so crucial to building up that number with all the best credit hacks you can find! If you’re looking for an easy way to start boosting your credit score, then this article is what you need.
One of the Best Credit Hacks: Credit-Builders
One way that can make a huge impact on your score is by opening up a new credit-builder account with a company, such as Self or Credit Strong. These accounts are specifically designed for those who don’t have much of a credit history yet or need to rebuild. When you make on-time payments, it can actually help improve your score in as little as six to twelve months!
Credit-builder loans are often for small amounts of money and have a repayment term of 6 to 24 months. This makes the loans short-term loans primarily used to improve your credit.
When you take out a credit-builder loan, the lender puts your borrowed funds in a secured savings account or a certificate of deposit (CD), which is then repaid in automatic monthly installments. After you’ve made all of the monthly payments, with interest, you get your money back. While you make payments, the lender reports your payment history to the three major credit bureaus: Experian, TransUnion, and Equifax.
The idea is that you can demonstrate your ability to make regular, on-time payments for a length of time. This is critical since credit scores are heavily evaluated on the basis of payment history, which accounts for 35% of your FICO score.
Why Should I Do This?
Opening a credit-builder account is one of the easiest and most effective ways to start boosting your credit score. Make on-time payments for at least six to twelve months, and you could see a significant increase in your FICO score. In the end, you not only raise your credit score but also save money.
After you improve your scores, you may begin qualifying for various sorts of credit, such as personal loans and credit cards, which can help to build your credit (as long as you continue to pay on time).
Be sure to get your free credit reports each year since this will help you monitor your progress on a regular basis! You can get all three of your credit reports for free at Annual Credit Report. This will help you stay on top of your credit game and make sure all your hard work is paying off!
See the First Post of the Credit Hacks Series: Easy Hacks to Boost Your Credit Score