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build credit.
Image By Kienma Prince

In this article, I wanted to talk about the best ways to build credit, and I realized that there are so many articles on credit. But those articles are mostly detailing how the credit score is actually calculated. Instead, in this article, I want to share with you a step-by-step guide on the best ways to build credit.

Alright, I know that a lot of you guys that are reading this article are quite younger, and sometimes I do get the occasional person emailing me saying “hey Prince, I think you can make it in life without credit”. While I don’t tend to like super-disagree with that, I don’t like love it either. That’s because without credit you’re just making your life a whole ton more difficult.

It really doesn’t need to be that difficult, I do think by having a good credit score, you actually make your life easier in some ways. For example, when you buy a new car, when you buy a house, when you buy a rental property, or when you just go to actually just rent an apartment, having a good credit score is going to make it a lot easier.

What Is A Credit Score?

A credit score is essentially a financial report card. Basically, as someone lends you money and you pay it off, every time there’s a new instance of that, your credit score gets stronger and stronger. Having a good credit score will mean you’ll be able to save more money in the long run, especially if you use your credit score in the right ways.

There’s this common misconception, especially with those people that tell me they don’t need a credit score, that you need to spend a lot of money to actually maintain good credit. That’s completely not the case, there are plenty of free methods to build your credit, and there are ways that you can build your credit without going into massive debt.

4 Ways To Build Credit

In this article, I want to share with you guys four different methods to build credit. Most of them are free, and if you follow the exact steps in this article, you’re going to have a really easy time building your credit in a really responsible way. That means by the time you actually do want to go lease a car, or buy a home, or get a rental property, you’re going to qualify for the lower interest rates. These lower interest rates mean that you’re going to actually save a lot of money in the long run.

1. Getting A Secured Credit Card

The first method to build your credit super easily is actually to get something called a secured credit card. I will preface this section and say, if you are a bad spender, that means if you do get your hands on a credit card, and you know you’re going spend a ton of money on it without any abandon, or basically with reckless abandon, then don’t get a credit card. But for the majority of people that are reading this article, being able to spend responsibly on a credit card is going to be the fastest way to build your credit.

What Is A Secured Credit Card?

Now what a secured credit card is, is basically a card that requires collateral for you to open. The bank doesn’t really quite trust you yet because you don’t have a credit score. Instead what they do is, request a deposit of around $200 to $300 sometimes even up to $500, and instead, they trade you a credit card so that you’re able to build your credit. But they hold on to your $300 or $500, in the case that you don’t pay off your credit card then they have something to basically use to pay off your bills.

When getting a secured credit card, you should always make sure that you’re getting one with no annual fee. Make sure that it is completely free for you to build your credit on.

The best part of having a secured credit card in my opinion is that you don’t need to spend a lot of money on it to actually build your credit. Just spend responsibly, spend like five bucks here and there on it, maybe 20 bucks a month at most. By the end of the month, if you just have 20 bucks on it, and you’re able to pay it off in full every month for six to 12 months, you’re going to be building your credit.

Then all of a sudden after like six to twelve months of continually doing this, the lender or the credit card company at some point is going to return your deposit to you because they understand that you are a trustworthy individual that is able to pay off their bills on time.

What You Have To Do

With a secured credit card strategy, what you essentially want to do is basically spend 20 bucks a month on it, pay it off in full, and don’t spend any extra money. Basically, don’t spend money that you wouldn’t have already spent on your secured credit card. What you really want to be using your secured credit card for, are everyday transactions that you would have spent money on already.

Personally, I preface this section with spending habits, and if you are someone who doesn’t know how to keep their spending habits in check, then maybe a secured credit card isn’t right for you.

But for the majority of you guys, if you just follow those steps which are

1. To open up a secured credit card.

2. Make sure it’s free.

3. Spend about five to twenty maybe fifty dollars a month on your secured credit card.

4. Pay it off in full.

After six to twelve months, you’re going to be building your credit in a really responsible and sustainable way.

What Secured Card To Get

As far as what secured card to actually get, what you can do is, you can go to your local bank or your credit union, and ask them if they offer any secured cards. You can also just apply for a Discover it a secured credit card online. This is one of my favorites because first of all it’s secured, and secondly, it also offers you rewards and cashback for using it.

There are some other great picks online, if you just google search best-secured cards, you can find some other options such as the Capital one secured Mastercard, the secured credit card, etc.

The credit card strategy is one of the best ways and most efficient ways to build credit as long as you’re doing it responsibly and sustainably. Within six to 12 months, your credit score could actually look pretty good.

2. Authorized User

Speaking of credit cards, another free method you can do to build your credit is to get added as an authorized user on someone else’s credit card. Ideally, you look for someone that you trust, who also has a good credit score, and is paying off their bills on time. But essentially, if you can get someone else to agree to add you as an authorized user, you also get a copy of their credit card, basically their credit card account.

You don’t even have to spend any money on this card, you can just literally leave it in a drawer. Well, essentially, what you’re doing here is you’re piggybacking off of their credit. By doing nothing, just by being attached to their account, you’re going to build credit in a natural way.

When To Do This

This is best done if you’re under the age of 18 because when you’re under 18, you don’t really have any other methods to build credit. So this can kind of get you a head start.

You can also do this when you’re after the age of 18, I think it’s a pretty cool hack especially if you agree to not use that person’s credit card. That’s another free method that you can do to build your credit using credit cards, but it does require someone else in the situation and with those situations, it’s always a little bit delicate. This is because you want to make sure you pick someone that you trust, and you pick someone that you know is going to actually fulfill their credit obligations on time as well.

3. Paid Services

Now, if you want to build credit and don’t want to use a credit card, there are some methods to do so but some of them cost a little bit of money. The first two I’m going to talk about are called Credit Pros and Credit Firm, they are credit score building companies. What they’ll do is, they’ll fix a bad credit score if you have any, and they will also boost your credit in no time. Credit Pros has a Trustpilot rating of 4.7, with over 230 reviews, only 11 of them are negative.

The Credit Pros

The Credit Pros is one of the 5000 fastest growing company in America ranked by Inc. Magazine, and have been six years in the business. They educate their clients on how to avoid credit-oriented errors and help build their credit scores. They report their client’s timely payments to all three credit bureaus, which will sporadically boost their credit scores. One cool thing I find interesting about them is their 90-day money-back guarantee. You can request a free consultation with them to find out more about them, and decide if you’ll want to use them.

Credit Firm

Credit Firm on the other hand is not too different from Credit Pros. Credit Firm mostly deals with fixing bad credit and improving it. They have been around for over 20 years, and have a Trustpilot rating of 4.0.

They carry on inquiries with the three credit reporting agencies (TransUnion, Equifax, and Experian) including some collection agencies like Lexis Nexis, and other credit furnishers to remove as much deprecatory information from your credit report. As always, you can request a free consultation with them and find out more about them.

Rental Kharma

Secondly, Rental Kharma, this one also assumes that you pay rent to a landlord or a property manager. Essentially what this service does, is it’s a service online, and you sign up for it, and basically, they verify that you’ve been paying rent for the past however long you’ve been at your landlord’s place. What Rental Kharma does is basically, they call your landlord up and ask if you’ve been actually paying your rent on time, and in full. If you have, Rental Kharma takes this information, and they submit it because they’re an intermediary. They submit it to credit reporting agencies, and that gets reflected in your credit score.

Basically, your rent being on time is qualifying you as credit-on-time payments. This service costs between $30 to $50 from what I’ve researched, and they do have some really good reviews on Trustpilot, they have a 4.5 average rating.

What I Think

Personally, I don’t know if that’s amazing, but that is pretty good. There are a lot of people that have even said that they’ve increased their credit score by using this service. Sometimes even upwards of 100 points or more. Obviously, there are going to be some one-star reviews too, I was just doing some research on this company, but it seemed like from all the one-star reviews I was reading on Trustpilot, it was mostly because of Rental Kharma couldn’t actually reach the landlord to verify the payments.

This service also depends on how good your landlord is, let’s say your landlord is someone who is really responsible and really willing to chat and verify your on-time payments, then you’re going to have no problems with Rental Kharma. On the other hand, if your landlord is someone who’s a little bit more, let’s say harder to reach, maybe doesn’t want to help as much, maybe your microwave has been broken for the last six months and your landlord is not doing anything about it. Then maybe Rental Kharma is not for you.

In any case, I just wanted to present at least other options for you to build your credit without using a credit card. I know that a lot of people don’t just want credit card options to build credit.

4. Co-signer

Another way to build credit pretty easily is to have a co-signer on any type of loan that you’re about to get. This is not a super-free method, I mean technically, it is free because getting a cosigner is free. But the fact is that you’re trying to get a co-signer for an auto loan for example. You’re going to be spending some money anyway, but the idea is that as long as you’re already trying to get that auto loan, having a co-signer is actually going to help improve your credit. So long as the co-signer’s credit score is above let’s say a 670 credit score.

Who Is A Co-signer?

What a co-signer is, is basically like a vouch for you. Essentially, that person who’s your cosigner is vouching that you’re going to make those payments on time, and if you don’t make those payments on time, then they’re on the hook for it.

A co-signer like I said, needs to pretty much have good credit and also be willing to be your co-signer. It’s generally someone that you know pretty well, such as a family member, or a parent.

This is one of the easiest ways to get a credit boost, but it is very situational because essentially, you need to be in the market for an auto loan or basically buying a home. And if you’re in the market for an auto loan or buy a home, it means that you’ve already had some income, and you should have some credit score already. But if you for some reason don’t have a credit score, and you need a co-signer for these activities, then that is one way to build your credit with a co-signer.

Summing It Up

To sum up this article, basically, getting a secured credit card is the easiest and most responsible way to actually do it and the quickest way to do it. This is because you’re going to get so many on-time payments so frequently.

It is still my preferred method to actually build credit, if you can get a secured credit card into an unsecured credit card later on I would suggest that method as always getting added as an authorized user, is a good way for a credit boost.

Same with actually having a co-signer and then obviously with those paid services I talked about if you don’t want to do it yourself. Credit Pros, and Credit Firm. Also, if you pay rent there are going to be those rental services like the one I talked about. Rental Kharma is one of them, I think there are a few other ones too. Don’t just look at one of them but do your own research when it comes to this.

These has been the four ways that you can build credit, I hope that you learned something from this article. if you did please make sure to share this article.

Feel free to follow me on Instagram my username is @kienmaprince, if you’re ever just bored scrolling on your Instagram, and you want to come to see me, that’s where I’ll be. Peace and Happy Hustling!

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