Your credit score is probably something you don’t think about that often until you really need it. For a mortgage, loan, car loan or even hired purchase your credit score is going to matter. If your credit score is too low you might be prevented from taking out a mortgage you so desperately want. There are a few creative ways you can quickly build your credit score, and if you’re looking to borrow in the future you’re going to want to start improving it now. Not only will a decent credit score allow you to access funds you might otherwise be rejected from, but the higher the score often the better interest rates you can negotiate. Here are my top 4 creative ways to build your credit score.
1. Increase Your Tradelines
Are you familiar with what tradelines are? They’re basically any form of credit you’re already accessing such as a pre-existing loans or a credit card, in other words they’re any account that shows up on your credit report. There is a difference between “good credit” and “bad credit,” and good credit can actually help improve your credit score while bad credit can wreck havoc on it. Increasing the number of tradelines you have while keeping up with repayments is a surefire way to improve your credit score.
2. Get on Someone Else’s Tradelines
Another quick way to boost your credit score is to get access to someone else’s tradelines. A simple way this happens for example is when parents add their children to their credit cards. All their credit history is passed down in some way to their children, which is a good way to begin to establish their credit history if they don’t have any. You can use the same tactic to your advantage. If you’re interested in establishing more primary tradelines, this can be a great way to do it without actually taking on any more personal debt. For example if your spouse has a better credit rating than you, you may want to consider having a card added to their credit card in your name. There are also companies that offer this service professionally, allowing you a quick and easy shortcut to improving your credit score.
3. Don’t Close Unused Credit Cards
Once you’ve paid off a credit card, it might be tempting to close the account to close the door on that chapter of your life. However having a lot of credit available and only utilizing a small amount can work in your favour. For that reason once you’ve paid off a credit card, so long as the annual fees aren’t excessive, it can be worthwhile keeping it open even if it remains completely unused. You have to be honest with yourself, though, are you able to keep it open without using it? If you’ve had issues with overspending in the past, it may not be worth the risk to explore this option for improving your credit.
4. Take Out a Credit-Builder Loan
As the name suggests this is a loan that’s intentionally designed to help those with low credit scores to build a credit history. You’ll borrow a relatively small amount of money, save $500-1000 through a bank. You’ll also agree that this loan balance will be paid back within a relatively short space of time, say 12 to 24 months. It will be placed into a savings account, earning interest along the way. Once you’ve paid back the loan in full you’ll get your money back with interest. So this can be a smart way to build a little credit while also having some savings built up with interest.
Don’t make the mistake of ignoring your credit score until you really need it. With these four tips I’m sure you can transform your credit score to a number that allows you to move forward with your life in the way you want to. Happy credit score building!