SAN ANTONIO – If the pandemic led to late or skipped bill payments, you credit score could have taken a hit. But there are ways to build credit the right way, according to Consumer Reports.
Credit scores impact so many things, including insurance premiums, mortgage interest rates, and car loans. So, millions of people with very low credit scores or no credit at all may encounter challenges.
“A bad credit history can also make it difficult to rent an apartment, go to college, or even get a job,” said Consumer Reports’ Lisa Gill.
The catch is that in order to build credit, you must have credit. And it’s tricky to get credit if you already have bad credit.
Consumer Reports offers these ways to boost your credit score:
Open a bank account, perhaps at a credit union, and take out several small loans. Make on-time monthly payments, and that should improve your score over time.
Consider applying for a secured credit card. That means it’s backed by a cash deposit held by the credit card company. Use it and make on-time payments.
Another option is to ask a relative with good credit to add you to their credit card. This not always a good idea, because it can strain relationships. A missed or late payment can ding both credit scores.
Borrowers with outstanding debt in collection should pay it off as soon as possible and pay all bills on time to avoid collections in the first place.
“Once you pay off any debt in collections, many credit-scoring systems won’t heavily weigh them when your score is calculated,” Gill said.
Be sure to check your credit report and dispute any errors by sending a certified letter with evidence to the big three credit bureaus, Experian, Equifax and Transunion.
Experian allows consumers to opt into its Boost program. Paying utilities, cellphone or even Netflix bills can help improve the score, if only slightly.
Consumer Reports warns to be leery of any credit repair service that promises a quick fix for a fee. You don’t have to pay to improve your credit, but it does take a solid financial plan and some time.