Credit score lower than you’d like?
We’ve got good news for you 🙏
There are many ways you can improve your score, a few of which we’ll cover in this blog.
However, building credit takes time. It does require managing your finances and patience in the process. Yeah, that last part is less cool, sorry. But it’s worth it.
Why your credit score is important
There are lots of reasons why your credit score is important.
One of the main reasons?
Lenders need to see you’ve had prior experience of managing financial products such as personal loans and credit cards.
The longer your credit history, the more your score will improve. This means you should be offered financial products with much lower interest rates than those with a lower score and less credit history. 📉
Landlords may also consider your credit when reviewing your rental application because they’ll want to see that you are able to keep up with your monthly payments.
Even car insurance companies might look at your credit score. In fact, Value Penguin says poor credit raises rates by 72% compared to having good credit.
So let’s hack the system and build some credit, baby ⬆️
Using secured charge cards to build credit
Secured charge cards are frequently referred to as secured credit cards, which in time, could help you build credit. With these types of cards, you pay a security deposit which then becomes your credit limit.
Each month, you’ll need to pay your secured credit card bill on time. The payments should then be reported to the major credit bureaus (Experian, Equifax etc) to improve your score.
Some cards charge an annual fee which can be $50 while others are free to use.
If you think this might be for you, Credit Karma has a list of Best Secured Credit Cards for February 2023 👀
Credit cards to build credit
If you’re thinking of going down the credit card route, you’ll need to practice ✨ responsible financial behavior ✨
You’re an adult now. It’s time to do adult things. Like get your finances in check 💅
There are tons of credit cards available but many require some kind of credit history in order to qualify. And if your score is considered poor (between 300-579), the annual percentage rate (APR) will be higher.
If you’re confident you’ll be able to manage the payments, here’s Forbes’ Best First Credit Cards To Build Credit In February 2023.
💙 Remember that with a credit card, the money you’re spending isn’t yours. Sorry to be the bearer of bad news but you will need to pay it back and this can quickly get out of control if you’re not careful and don’t track your spending.
So, if you’re looking for something that could help build your credit that isn’t a credit card, we’ve got something that might help… 💙
With Cleo’s Credit Builder Card, you’re totally in charge of deciding how much money you want to spend. The money you add to your card’s security deposit then becomes your credit limit (FYI, there’s a minimum deposit of $1).
It’s pretty simple.
For example, you add $50 to your security deposit, you spend $50 and that’s it. It’s really hard to go over 💸
And with our auto repayment option, it’s all set up so it’s pretty much impossible to miss a payment.
How can it help build your credit?
Cleo reports your payment history to the credit bureaus and over time, on-time payments may help your credit score.
If you select the ‘carefree credit building’ option, Cleo will automatically take your payment so you never have to worry about missing a payment.
What does Cleo report to the credit bureaus?
- Outstanding balance owed: the balance not paid off from the prior month. If you paid off your last statement in full, your outstanding balance should be $0
- Payment status: the status of your payment. Your payment status is a reflection of whether or not you paid last month’s statement
✨ (If you have the ‘carefree credit building’ option switched on, you shouldn’t have to worry about the above two points.) ✨
- Current balance: the amount you have spent during a statement cycle that is owed on the due date for that statement
- The highest credit: the highest statement amount – also known as the most amount of credit you’ve ever spent
Interested? Yeah, we thought so. Check out How To Build Credit History with Cleo’s Credit Builder Card for more tips.
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Big love. Cleo 💙
*The Credit Builder Card is issued by WebBank, Member FDIC pursuant to a license from Visa USA Inc. Access to the Card is subject to approval