Have you ever found yourself in the position of applying for a loan and being denied due to limited credit history? It can feel like applying for a job and being turned down for lack of experience. It’s the classic catch-22, so what can you do? If you’re someone who is just starting out with credit or are someone who has never needed a credit card or a loan, your Financial Gurus are here to help you build a strong foundation and get started on the right foot!
Tools to Help You Build Credit
- Secured Credit Card – Did you know you can start building credit by using your own funds? Whether you have no credit score or a low your credit score, and you’ve got cash to deposit into your WWFCU account, you may qualify to get our Secured Visa. Your deposit is usually equal to your credit limit, so if you deposit $200, you’ll have a $200 limit. Secured credit cards work just like your standard credit card, they just eliminate the credit history required to obtain one. You’ll have a revolving credit limit in the amount of your deposit that you can make purchases with and pay it down as you go or when your monthly bill comes due.
WWFCU is proud to offer Visa Credit Cards with interest rates as low as 12.00% APR (Variable) and a multitude of benefits!
- Become an Authorized User – If you have a family member or close acquaintance with a good credit score, ask if they would consider adding you as an authorized user to their credit card. You’ll get credit for their positive payment history, and you don’t even have to use the card. Just make sure payments are being made on time as any negative history can also affect you. This can be a quick way to establish credit and is a great option for our youth members to have credit history by the time they reach adulthood.
- Use Paying Bills to Your Advantage – Chances are you’re paying utilities, rent, or even streaming services every month, but did you know you can report these payments to the credit bureaus? Self-reporting these payments through a third-party service like Experian Boost can potentially help you generate a credit score or help raise your existing score.
Using Credit Wisely
- Making On Time Payments – Make sure you are always making at least your minimum monthly payment on time. Payment history alone makes up 35% of your credit score, so it carries significant importance. Just one missed payment can drop your score by nearly 100 points and can stay on your credit report for up to seven years. Try utilizing auto pay when available or set yourself a reminder to make your monthly payment before the due date. Also, try paying the balance in full each month to avoid paying interest.
- Keep Balances in Check – The second largest influence making up 30% of your credit score is capacity, also referred to as your utilization, or the balance on your account versus the limit. You want to keep your balance at 30% or lower vs what your limit is. For example, if you have a credit card with a limit of $1,000, you want to keep the balance on the card below $300. Keeping your balances in check shows you aren’t overextending yourself and are responsible with your credit management.
- Apply Strategically – Every time you apply for a loan it generates a hard inquiry on your credit report. Each hard inquiry can make your credit score take a small dip but typically will bounce back after a month or two. However, if you are applying for multiple loans back-to-back, this can lower your score quite a bit all at once. You also don’t want to take on multiple loans or lines of credit within a short time frame, especially when you’re just starting your credit building journey. One credit card with good pay history is enough to get you started and you’ll start seeing results in just a few months.
Your Financial Gurus are here to help you reach your goals one step at a time! For further information feel free to email us at financialsupport@wwfcu.org or call 734-721-5700 to schedule a free financial counseling session. For 24/7 credit monitoring, you can also utilize our new “My Credit” tab on your online and mobile banking. Use this free service to track your credit score and get key insights into what is affecting your score. Unlock your full potential and take control of your credit today!
Sincerely, Your Financial Gurus.
