How credit products improve your financial future
Building credit is an important step in achieving financial stability and independence. A good credit score can help you secure loans, rent an apartment, and even land a job. However, if you have little to no credit history or a poor credit score, it can be challenging to build credit. Fortunately, there are several products and services available that can help you establish and improve your credit. In this article, we’ll explore some of the products that can help build credit and how they work.
There are several products that can help build credit:
- Secured credit cards: These credit cards require a security deposit, which acts as collateral and helps reduce the lender’s risk. They’re a good option for people with no credit or bad credit, as they allow you to build credit without having to qualify for an unsecured credit card.
- Credit builder loans: These are loans specifically designed to help people build credit. The lender deposits the loan amount into a savings account, and you make monthly payments toward the loan. Once the loan is paid off, you receive the funds in the savings account, plus any interest earned. These loans are often offered by credit unions and community banks.
- Rent reporting services: These services allow you to report your rent payments to the credit bureaus, which can help build credit. Not all landlords or property management companies participate in rent reporting services, so check to see if your landlord is a partner before signing up.
- Authorized user status: If someone adds you as an authorized user on their credit card account, you can benefit from their positive credit history. However, be aware that any negative activity on the account will also affect your credit.
- Credit builder accounts: These accounts work similarly to credit builder loans, but instead of borrowing money, you make deposits into a savings account. The lender then reports your on-time payments to the credit bureaus, which helps build credit over time.
It’s important to note that using these products alone won’t guarantee a good credit score. You’ll also need to make sure you’re making on-time payments, keeping your credit utilization low, and maintaining a mix of credit accounts. Additionally, it’s important to be cautious of predatory lenders and scams, and to research any product or service before signing up.