Many people either have not built credit yet, messed up their credit at a young age, or have at some point had credit ruined due to circumstances. Bad credit limits access to many things. Some companies even look at credit as part of the hiring process. For instance, government agencies may review credit as part of the clearance process.
Good credit provides access. From securing the best rates for major purchases to buying a home or even starting a business, credit is the gatekeeper. Where do you start if you are trying to rebuild credit? I am no expert, but here are some first steps that worked for me and a few other suggestions:
- Pay your bills on time — This is non negotiable. Good credit cannot be built with late payments. Utility bills are an important part of this.
- Pay larger deposits — Sometimes, even though the credit scores may not be up to par, paying a larger deposit will help. Here are some examples:
- Apartment rental — Some apartments that normally would not rent to occupants with risky credit ratings might be more open to it if a larger deposit is paid. First and last months rent for example may need to be paid up front. The sacrifice is worth it and can help rebuild a positive rental history.
- Car purchases — To purchase a vehicle from a major dealership, it may require a much larger deposit. There are also places called ”note lots” or ”buy here/pay here” car lots. Although these lots do run credit, presenting a current pay stub and/or a utility bill will suffice to purchase the vehicle . Usually these places requires bi-weekly payments and the buyer needs to ensure the dealership is reporting payments to the credit bureaus.
- Get a secured credit card — Secured credit cards require a deposit to be opened but can be good for building credit
- Get a unsecured credit card — Due to credit the initial interest rate will most likely be higher but the consistent payment history will positively impact your credit. The key is to be intentional about using the card and paying the card off every month. Many banks offer credit card products for individuals seeking to build or rebuild credit
