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How to Build Credit

The Real Estate Show adds another gem in the weekly series on credit with today's edition of How to Build Credit. Building credit can be a challenge, especially if you don't have any already. If you don't have any credit history, it is difficult to get a loan, A credit card, or even an apartment. So how are you supposed to show a history of responsible repayments if no one will give you credit in the first place? That's the question we answer in today's episode of The Real Estate Show.

A Fico score, widely regarded as the industry standard, requires you to have at least one account open six months or longer. But that's not enough, you also need at least one creditor reporting your activity to the credit bureau's during the last six months. So what do you do? You can start by using several tools that help you to establish a credit history. For example, secured credit cards or a starter or credit builder loan can go along the way to do that. You can also find a cosigner for a credit card or loan, or someone can add you to their existing credit card as an authorized user on their account.

So here are five ways you can establish credit:

1. Apply for a secured credit card. Especially if you're starting from scratch, you might need to start with a secured credit card, which is backed by a cash deposit you make a front. The amount of the deposit you make is usually the same as your credit limit. Once you put up the deposit, you will use the credit card like any other credit card to buy things, to make a payment, etc. Needless to say, it's important to make your payments on or before the due dates.

2. Apply for a starter or credit builder loan. These loans are designed for the sole purpose of helping people to build credit. Usually, the money you borrow is held by the lender in an account and not released to you until the loan is repaid. It's basically a forced savings plan and your payments are reported to the credit bureau's. These loans are most often offered by credit unions or community banks.


3. Find a cosigner. Another option is to get a loan or unsecured credit card using a cosigner. Be sure that you and the cosigner understand that the cosigner is also responsible for the full amount owed if you do not pay.

4. Become an authorized user on an existing account belonging to someone else. Sometimes a family member, relative, or significant other may be willing to add you as an authorized user on his or her existing credit card. When you are an authorized user, you get the same access to the credit card use, and it also reports to your credit history so you can build that history. Make sure you find out whether the credit card issuer reports authorized user activity to the credit bureau's, not all do.
5. Make sure you get credit for the rent you pay. There are rented reporting services such as rental karma and rent track that take a bill you are already paying and put it on your credit report. This helps build a positive history of OnTime payments.not every credit score takes these payments into account, but some do, and that baby enough to get a loan or credit card that firmly established with your credit history for the future.

For more about this topic, and to learn more about Real Estate Investing and learn HOW by listening to The Real Estate Show with Eric Willner, Live every weekday morning at 8 o'clock (EST) on Florida's Money Talk Radio station WSBR AM740, FM 96.9, and FM 103.9. Then contact us at 888-595-7779 to see how we can help you with your real estate goals. You can also hear us on the free apps: iHeart Radio and TuneIn and the WSBR AM740 app. If you miss the live show, Recorded Rebroadcasts are available 24/7 on Facebook.

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