How to establish a solid credit history

No one can put an emphasis on how credit is important in making major financial decisions. You need your credit to get a loan, purchase a vehicle among other things. It takes a lot of time and finances to earn high credit scores. People who are new to this or trying to repair their credit will find it hard to establish a solid credit score, which is why it s always great to start as soon as you can.

So, how does one build a good credit?

You need to establish a credit history which will look attractive to lenders and some traders. To do this, you need to borrow money and makes sure you pay it back in time. it sounds so simple but it’s actually not. Improvements can be seen in short periods of time but major changes are bound to take time.

These strategies are meant to help you develop a great momentum in establishing a good credit history that will help your fiancés in a long time.

The cash secured loans are one of the best and easiest loans to qualify for. It is basically a loan that you make payment for before you receive. With the cash secured loan, you need to borrow against the money you have saved up in your credit union or bank. Lenders take little risk with this loan. These precautions are taken so when you do not make the full payments, the lenders can use the money as leverage.  It is very easy to get an approval for this loan and it is great for people who want to start establishing a credit history.

Get secured credit cards. This is just like a cash secured loan, but with credit.  Your credit card allows you to borrow against the amount of money you deposit with the lender. The only difference is that you make your payment using your credit card.

Get help from a co-signer.  They are basically a person who helps you complete your loan applications. It could be a spouse, friend, co-worker or family. This should be handled legally to make sure you avoid any financial issue.

Make sure the co-signer has a good credit and great income, especially if you want to qualify for a loan.  They should be the main reason for your loan approval, which means they need to have experience in establishing your credit. This is very risky because the co-signer is to repay any loans on case you fail to make the payments.

The other alternative is to ask someone who has a credit account to add you as an authorised user. When you do this, you receive a card with your name on it and can use it to make major purchases. Keep in mind that you are not responsible for the loan payments.

Final word

It does not matter what method or order you use to lift up your credit history, the only important things is that the lender reports the positive activities on the major credit bureaus.  Without the reports, you will not see any improvement on your credit.