by Emily Hechler 
A strong credit score comes with many benefits in the financial industry. You can secure low interest rates on loans, increase your credit limit, and build a positive reputation with lenders. Building a credit score to yield the benefits takes time and discipline. It’s important to start building credit so you are prepared for situations when you need a good credit score, such as applying for a car loan or an apartment. If you have no credit, here are ways that you can build your credit.
Pay off your student loans. According to Forbes, 55% of students from public four-year institutions have student loans. While many student loans don’t require the borrower to make payments until they graduate, recent graduates have a large balance to pay. Making on-time, regular payments of at least the minimum will help you build credit. Since it can take years to pay off student loans, this consistency will build your credit over time.
Open a credit card. Credit cards are great financial tools when you use them wisely. If you have no experience with a credit card, start by opening a low rate credit card. Make a few, necessary purchases each month with your card and pay off the balance in full when you receive your bill. This will help you stay out of debt while building your credit. If you accidentally spend more money than you planned and can’t pay your full balance, the low interest rate feature means that you will have to pay a little sum in interest next month. To avoid unnecessary interest, keep track of your spending with online or mobile banking.
Become an authorized user on another credit card. If you aren’t ready to open your own credit card, you can become an authorized user on a family member’s credit card. In this scenario, you can spend the money attached to the credit card but as a secondary user. The primary user receives the monthly bill. However, if they fail to make payments, you are also held responsible, which may cause your credit score to decrease. We recommend this path only if you have a trusted family member or friend with a positive credit history that makes their payments on time. Otherwise, this solution may cause you more harm than good.
Get a credit builder loan. A credit builder loan is a low balance loan designed to help you build credit. When you open a credit builder loan, the money you borrow sits in a Savings account at the credit union. As you make your monthly payments, you help build your credit score and history. When you pay off your entire loan balance, you get access to the Savings account. With Alltru’s Credit Building Loan, you can receive half of your interest back if you make all your minimum payments on time. While this loan is a short-term solution, you gain the good history on your credit report.
By building a good credit history and score before you need it, you’ll be thankful later when you can enjoy the perks of a strong credit score. A high credit score shows lenders that you are a trustworthy and responsible borrower. When you are ready to build your credit, come to Alltru to get the financial tools you need.
