Data released by Lending Club recently shows that both credit markets and credit scores are under-performing. The data revealed that people’s average credit scores were actually falling, which implies that those people are being too risky with their credit. This could partially be attributed to the growth of the peer-2-peer lending scene. Or it could be attributed to the growth in confidence since the economic recovery set in. At the same time, credit markets are also tightening, making it more and more difficult for people to acquire new lines of credit. It now appears that credit markets will remain subdued for some time. Regardless of your situation, take a look at our credit score tips to keep your credit score healthy.
1.) Maintain healthy habits
Maintaining reasonable credit practices is arguably the most import factor to keeping your credit score healthy. This includes making monthly payments on time, every time, and ensuring that all of your bills also get paid back in a timely fashion. You can use alerts on your phone to remind you to check your credit card balance so you can track your spending patterns and limits. Alternatively, you can use money management apps to keep track of your spending patterns. Watching your spending patterns and keeping track of your credit levels is vital to maintaining a healthy credit score.
2.) Build Your Credit Safely
Now that credit markets are tightening, you may find it more difficult to build your credit score. If you’re just entering the market, you will find it especially difficult to find ways to build credit history. For those with little to no credit history, it might be best to look for a credit building loan. Some institutions, usually credit unions and community banks, will allow you to borrow money simply for the purpose of building credit. The borrowed money will be stored in an account with the lender, and the payments will be automatically deducted from that account. This is a very safe way to build credit. Alternatively, you could apply for a secured credit card. These cards are for individuals with little to no credit history who otherwise would be unable to be approved for a regular credit card. You will have to provide a deposit for the card, usually $100 to $1000, which will be paid back once you decide to close the card. Your credit limit is your deposit and there are usually no rewards benefits or other perks for secured credit cards.
3.) Get Help Getting Credit
With tightening in credit markets, lenders are going to be less willing to give you a line of credit, even if your credit score isn’t that bad. But there are alternatives. If you need help getting a loan or a credit card, you can ask someone to be a co-signer. By co-signing a credit card or a loan, the co-signer agreed to bear responsibility for the loan or credit card should you fail to payback the debt. Another option is becoming an authorized user on someone else’s credit card. A friend or a relative can allow you to use their card and build credit, without you bearing any legal responsibility to pay back those debts. Both of these methods are usually used for younger people who need help building credit, or spouses who’ve never had a chance to build credit in the past.
