How to Fix or Build Your Credit from Zero
Today we’re going to learn about how to build your credit, a very strong one. There are people inquiring about the multiple ways and how you can actually build a strong credit, especially if you cannot qualify for a credit card just yet, or that perhaps you have declared bankruptcy and you are trying to get started from the ground up.
We have a couple of tools to share with you and how you can leverage those daily life activities that you typically have and just incorporate that into your credit-building activities, so to speak. For that, we’re going to leverage your rent.
We’re going to explore three different websites that you can use to report your responsible payments, your timely payments into your credit history so that way, your credit can build up faster and eventually get you qualified for a credit card.
One of those websites: Rental Kharma
- Why Rental Kharma? Because you can get an average score increase of 40 points, you can get results as fast as in two weeks, and it’s a satisfaction guarantee.
No credit check is required because you’re trying to build up your credit. You can even add your spouse so you can both build your credit.
The way it works is that you have to complete an easy registration and give them some information about yourself. What they do is that they will contact your landlord or the property manager to verify your rent payments. They can do all the work for you.
Every month, what they’re going to do is just to verify or confirm with the landlord or property manager that your rent payments are being made on time. Eventually what you will get is that same payment history and your rent reflected in your credit score history.
Rent Reporters: They report your rent payments directly to Equifax and TransUnion. Very similar to Rental Kharma, they have been able to show an increase of 40 points in an average of 10 days. It’s actually less than two weeks.
The way it works is as follows:
- Sign up.
- They’ll verify your rent.
- They will basically report the credit or your rental payment to the credit bureaus, your score changes, and eventually your life changes.
If you are a landlord, you can complement your landlord servicing to your tenant. Remember, real estate is a relationship-based business. In addition, to provide your tenants with a great place to live, you can also help them build their credit at the same time by just clicking on “landlord” and you can help them build credit. At the same time, you can use this service as a way to scan the right tenant for your property.
RentTrack: With RentTrack you have the flexibility to pay your rent online. By paying your rent online, you simultaneously build your credit history. If you are a property manager or if you are a landlord, you can definitely leverage this website as well.
You can collect rent online if you are a property manager. You can report rent, that way you can actually help your tenant. You can even request a demo in order to help you make that right decision as to which service is actually right for you.
Reporting your payments and taxes helps you improve your credit history
Some of the companies that feature them are: The Washington Post, NBC, Los Angeles Times. These three websites are ideal if you’re planning to leverage your rent history in order to help you build credit.
Another way you can build your credit is by using prepaid credit cards. What exactly is a prepaid credit card? Think of it as a savings account. You go to the bank, you make a deposit for an XYZ amount of money. Let’s say you have $1,000 saved. What they do in return is that they’re going to give you a prepaid credit card that acts like a regular credit card.
It is backed by your money, by the money that you have put in the bank and basically, the limit of that card becomes the amount of money that you deposited. If you deposit $1,000, then your new credit limit will be exactly $1,000.
How to fix or build your credit from 0: Build Credit History
What happens is that you’re going to build a credit history over time, and then eventually you’re going to start receiving offers from other credit card companies that you can apply to.
You can either choose to close that CD account or that prepaid account, or you can go to the bank and request a transition, a switch from a prepaid card to an actual credit card once you’ve had that credit history established.
There are two banks that offer prepaid credit cards options:
- One of them is Bank of America, and the link is right here.
You can check out every single detail on the website: They help build your credit with a minimum refundable security deposit of $300. If you don’t have $1,000, you can establish a credit history with just $300. Of course, the more money you deposit towards that prepaid card, the higher your credit limit.
You get to report your FICO score and they even offer deposit returns. Based on your overall credit history, including your accounts with us and other credit card loans, you might qualify to have your security deposit returned.
Not all customers qualify, but that doesn’t have to be you. You can definitely build a strong foundation, a strong credit history, and get that money back, and turn that prepaid credit card into a real credit card.
Another option that you have is by leveraging Capital One. Capital One also has a secure MasterCard. It has a zero annual fee. Just like any other credit card, they do have interest as Bank of America.
- Prepaid Credit Cards: These prepaid cards are not the same as a debit card. Every time you use the money, you have to pay it down. They are acting like credit cards, what the difference is, that you’re putting down a deposit as a collateral, as a way to guarantee that if you don’t pay, then they’re going to take money away from that deposit because you haven’t built a credit history for them. You have to give something in order to receive something.
Bank of America and Capital One prepaid Credit Cards: They both have interest. You have to make sure that whenever you spend that money, you repay that right away so that you don’t have to accrue interest and have a higher debt to repay. The beauty of this is that you will get to build your credit history.
About the minimum required, you have three options: It’s actually a more flexible option than Bank of America because with Bank of America, you are required to put down $300 but with Capital One, you can do $49, $99, or $200.
That deposit is also refundable over time. If you were to prove that you are responsible financially, you can build a very strong credit history. You can get that money back and have the prepaid card converted into an actual credit card.
There is a considerable difference between prepaid and regular credit cards
You will get an initial credit line and then you’ll make the minimum deposit and then you’ll get the credit line extended to you. Then they actually have automatic credit line review, meaning that over time, if they see that you’re behaving financially responsible, they can actually increase that minimum that you have and you can personalize the payments.
You can actually choose what’s the right monthly due date for you, the payment method, whether you want to do it over check, whether you want to do a direct deposit. That will be completely up to you to decide.
Self: It’s a very good tool for you to leverage in the event that you don’t even qualify for a prepaid credit card. The way it works is this:
- You have to apply for a credit business amount.
- Then you have to decide on the amount that you want to ‘save’ in a time period of 12 months or 24 months.
- You also get to pick how much money you can put away on a monthly basis.
Over time, what you’re going to do, you’re going to put money towards that account. In a way, it’s like a savings account. The difference is that with that saving account, it’s going to report directly to the credit bureaus. Over time, you’re going to start putting money away.
Every time you make that deposit to put money away, that activity in itself is going to be recorded and it’s going to be reported directly to the credit bureaus. Over time, towards the end of that period of 12 months you’re going to get all your money back minus the interest and the fees that the company charges.
It is a very good tool for those who cannot even qualify to receive a prepaid credit card or maybe, this is an additional tool that’s going to help you compliment all of the other activities.
For example, you want to do a mix of using Rental Kharma services and applying for a prepaid card, and at the same time, you want to leverage yourself as well. Then those three activities combined, are going to help you build your credit history perhaps even faster and it will get you sooner rather than later access to a real credit card.
Then you can put all the ugly past in back and then just continue to move forward, and continue to increase your financial profiles. That way, you look appealing to the bank at the time you want to come in and start investing in Real Estate.
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