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It’s easy to assume that all adults in America have some sort of credit score that is measurable, right? Wrong! In 2019, the Credit Bureau of Consumer Financial Protection reported that 22% of American adults do not have a credit score due to their credit being too thin or too outdated to track.
While this may sound good at first, this can be a major hurdle for you when attempting to purchase a car, home, or get any sort of loan. That is why it is so important to build and maintain your credit the right way!
But how do you get started? What do you do? We have you covered!
In this post, we will share with you several tools you can use to establish a credit history for yourself if you never previously had credit.
Not sure how to start building your credit? PVS Financial Coaching & Services can help! Contact us today!
Self is a company whose mission is to help people who are new to the world of credit get their foot in the door. This company offers a Credit Builder Account, which allows people to build a credit history through an installment loan while also saving money. Why? Because after you complete your process, your money is sent back to you! How neat is that?
On their website, Self explained the process using three steps:
- Apply for a loan that’s held by our bank partners. Your money is secured and protected in a bank account.
- Pay off the loan in 12-24 months. You can choose a repayment plan that fits your budget.
- Each payment builds credit history and adds to your savings. Your payments are reported to all three credit bureaus.
As long as you make your monthly payments on time, you’ll be sure to gain a positive credit history in no time!
When you get a Credit Strong account, like Self, you are getting an account that helps you build credit and save money during the lifetime of your account.
When you open your account, Credit Strong gives you an installment loan and puts the borrowed money in a savings account that is in your name. Each month you make a monthly payment of principal and interest on the loan, which is credited towards your savings and the cost of the service and is reported to all the major credit bureaus. Then when your load is fully paid, your money is released back to you!
Credit Builder is a type of secured card that allows you to build your credit by opening up an account with the company and getting a card that works similarly to a debit card, except this card reports your payments to credit bureaus. All you have to do is sign up for an account (no credit check required), deposit $200 to put on your secured card, and start making purchases! Regular payments will help you start building the credit you need!
Chime isn’t just a banking app! Chime has a Credit Builder program that offers users a secured card, guaranteed to increase your credit score by an average of 30 points. Like Credit Builder, there is no credit check; however, there is no minimum security deposit that is required to get started. All you need is a Chime Spending Account and qualifying direct deposits of $200 or more within the past year to qualify for the card. If you deposit $200 in an account within 45 days of opening the account, you get $75 credit on your chime card to use on whatever you like!
If you were looking for another secured card option, Discover it® Chrome is definitely one to check out! This secured card helps individuals build credit by assigning users a secured card that they can use to make purchases and make payments that will be reported to the major credit bureaus. This card offers no annual fee, 2% cashback on the first $1,000 in combined spending at gas stations and restaurants per quarter, Introductory APR on purchases and balance transfers, and the option to earn double the cashback at the end of the first year with Cashback Match. There is an application required for this card before an account can be opened.
Fingerhut is an online retail website where you can purchase anything from beds to computers. However, some people may not realize that Fingerhut offers their Fingerhut FreshStart Credit Account, which you can use to build your credit! First, you will create an account and go through their approval process and get your credit limit. After that, you will be able to make a purchase, but you will need to make a $30 down payment. Finally, you can pay your item off over a set amount of months and build your credit.
If you do well with their FreshStart Credit Account, you will have the ability to be upgraded to their Fingerhut Advantage Program!
Please note that you can only use this credit program with Fingerhut.
Last but not least are the Credit and Business Plus Programs from BankPlus! Both programs aim to help businesses and individuals establish the credit they desperately need.
The BankPlus Credit Plus Program is a “small-dollar, short-term loan product designed to encourage participants to develop a regular savings plan.” Users will establish a CreditPlus Checking and Savings account with BankPlus to start their journey through this program. Before you can be approved for the loan, you are required to complete the financial literacy seminar provided by the bank and earn a Certificate of Completion. Once that is all completed, you will pay your required deposit and start using your account!
If you are a small business owner, you will want to check into the BankPlus Business Plus Program, which is similar to the Credit Plus Program but is specifically designed to empower business owners to establish credit and secure funding for their businesses. If in this program, you will also be required to take a four-hour BusinessPlus financial literacy class. Once you receive your certificate of completion, you may begin the BusinessPlus application process and establish a ValuePlus Business checking account.
Check out our YouTube channel, where Angenett tells individuals how to get started without a prior credit history! She also mentions the resources listed above. Click here to watch the video!
Building credit, especially when you don’t have any, can be extremely confusing! However, the key is to remember that it is NOT impossible to do! Be sure to check out the resources mentioned above, and you will be sure to head in the right direction!