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Who Can Help Me Build My Credit?

Jennifer White
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Who Can Help Me Build My Credit? article image.

Dear Experian,

What companies do you recommend for building credit?

- SIP

Dear SIP,

You don't need to hire a company to help you build credit. There are lots of ways to begin building your credit history, and you can do them yourself, for free.

The first step we recommend is to get copies of your credit reports so you can see what's being reported. You can request your free Experian credit report.

You also should consider ordering your FICO score for free from Experian. Getting your credit score is key because with it you will receive a list of the top factors negatively impacting your credit scores, known as risk factors. When you work on addressing your risk factors, you'll be working toward improving your credit scores.

How to Start Building Credit

If you are just starting out and establishing credit for the first time, you may have what's called a "thin file." A thin credit file is generally defined as one with five or fewer accounts. Some tips for establishing credit when you have a thin file:

  • Apply for a credit card. If you don't already have one, it's a good idea to apply for and start using a credit card. Credit cards provide lenders with a lot of insight into how you manage debt because they allow you the freedom to decide how much to charge and how much to repay each month. The key is not to overspend or make late payments. Ideally, you should pay your balance in full each month.
  • Open a secured credit card. If you have a thin file, you may not be able to qualify for a traditional credit card on your own. If that's the case, consider opening a secured card. They are easier to qualify for because you put down a deposit when you open the account, so there's less risk to the lender. Ask the issuer whether it reports secured card accounts to the three major credit bureaus (Experian, TransUnion and Equifax). Even if they don't, the bank may eventually convert the account to a traditional unsecured credit card if you make all payments on time.
  • Ask a family member to cosign. If you are lucky enough to have a family member with great credit who is willing to cosign for a credit card or installment loan with you, this can be a great way to begin establishing credit in your name. Keep in mind that any missed payments will also go on your cosigner's credit report, hurting their credit scores as well as yours.
  • Ask someone to add you as an authorized user. Another option is to become an authorized user on a friend or family member's account. As an authorized user, you can use the card to make purchases, but you are not responsible for making payments. If the lender reports authorized-user accounts to the credit reporting companies, being added to the account can help you begin building credit.
  • Sign up to have your utility and cellphone payments reported. Experian now has a free service called Experian Boost®ø. This service allows you to have your on-time monthly utility, cellphone and other telecom payments added to your credit report. The enrollment process is fast, easy and secure. It can be especially beneficial to those with thin credit files or those with credit scores below 680. You can learn more about Experian Boost here.

Once you begin building credit, be sure to make all your payments on time, keep credit card balances low and don't apply for too many credit products in a short period of time. Managing your credit this way can help you establish credit and improve credit scores to help you reach your financial goals.

Thanks for asking,
Jennifer White, Consumer Education Specialist

This question came from a recent Periscope session we hosted.

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