What I've been told and what I've learned is mostly this: payment history is king. An easy way I've been told to establish a payment history is through a credit card, but my score was so low that I couldn't qualify for one. So what's a girl to do? 

Thankfully, there are other ways to establish a credit/payment history. Here's my list of top ways:

1. Phone Bill

Here's the deal: any payment plan can enhance (or detract) from your credit score! If you already use a cell phone, your monthly bill payments are building your score, for better or worse. Really, any utility bill can help, I just chose to focus on my phone bill here since my other utilities are made in my landlord's name. You can get some inexpensive phone plans and rely mostly on public wifi instead of using data. 

Now, the disclaimer is that not all utility companies report to credit bureaus, but paying bills can go a long way. I know my medical bills hurt my score and I saw a huge improvement once they were paid off. Other bills, like insurance and car payments, definitely go a long way towards impacting your credit score. Notice how I said 'impact' and not 'improve'? If you miss payments, it will hurt your score. The only way to improve it is to prove that you can safely handle risks. 

2. Credit-Building Accounts

Here's the not-so-secret weapon at the heart of this blog post: SELF LENDER. I just opened my account in May, and I've already seen my score raise by 90+ points! That might not be your result, but as long as you make your payments on time you will eventually see your score raise. My score was super low and I also had a bill that I made my last payment on during that month, so I think that played a huge part.  SELF is now opening its card up for individuals who don't have a credit builder loan account through them. See if you qualify today! This is a secured card, so you can only spend as much as you deposit on the card. This is a safer way to build credit or repair damaged credit. 

There are other financial institutions that offer credit-building cards, such as CHIME or VARO. I've used both! You can read my in-depth post on VARO here. I currently use VARO for all my personal finance/banking. Both of these cards only allow you to spend what you have in your credit builder account, which is a great safety net. Before I was able to get a credit card, I would pay my subscriptions with my VARO BELIEVE card to help build my score. This also helped with budgeting. My recurring purchases came out of my BELIEVE account and I used my checking for living expenses and my savings for emergency/flex spending. Think cash envelopes but with online accounts. Using different accounts for different spending categories has been a technique that's really worked for me. What I really love about these accounts, though, is that they are FREE. When I switched from monthly bank fees to free banking, that little amount added up!

3. Pay Off Debts

Obviously this one is the hardest, but the less debt you have, the less of a risk you look to a potential lender. Like I said above, I think paying off one of my debts was crucial to bumping up my score. A crucial way to pay off debt? Make more money. If it's possible to pick up more hours/a second job to double down on debt payments and maybe beef up your savings account while you are at it, it may be worth it. Maybe. You might be like me and stretched thin as it is. 

I hope this helps. I really felt like sharing with you what I've done to raise my credit score. I've only been at this since May (hello, graduation!) but I'm excited to see if raising my credit score could help stretch what I'm making writing into an eventual house of my own. It's probably going to take a beefier second job instead of waitressing, but hey, what is young adulthood for except for figuring things out? I'm enjoying the adventure!

4. Use a Credit Card Wisely

The next step in building credit is to open an unsecured card. Your credit score might take a small hit initially, since opening a line of credit can signal that you need credit, but if you use your new card wisely, you can help your score tremendously. I try to spend less than 30% of the card at a time, or keep less than a 30% balance at all times. For example, I have a card with a $300 limit (I know, big stuff, right?). I keep the balance on that card below $90 at all times. By not maxing out the card but continuing to use it for small purchases that I pay off early and often, I've been able to build my score up. I was able to recently take out a card with a limit of $700, which is a big step for me. My score still isn't great, but it is now moving in the right direction. 

Here's how I manage my credit cards: I have a bank account that is tied to each card. I add money monthly to the checking portion to help pay off my card. I treat this like a secured account, where I only allow myself to spend what I have in my checking account tied to that card, regardless of what the credit limit is. My goal is to save up the amount of each card's credit limit as an emergency measure. Any of the cash back rewards go into the savings account tied to that card. I'll admit, I have a lot of accounts and cards, but like I said, this way of budgeting works for me. I think the best part is that it limits impulse purchases since I have low balances in each account, so if I want to splurge, I have to move money from different accounts into one. I usually don't want to deal with that hassle, so I spend less this way. That doesn't mean that you have to bank like this, though. 

5. Actively Monitor Your Credit Score

But not in an obsessive way, you know? You don't want to monitor it so much that bureaus think you have to keep close tabs on it. But checking your score annually and printing the report that corresponds to it, can help you personalize your credit-building plan. Maybe you have a high revolving debt so you need to pay down your accounts to see an improvement. Or maybe you don't have enough lines or a variety of credit to positively impact your score. Both of those issues require different approaches. If you have a high revolving debt, taking out additional lines of credit will damage your scores, whereas if you don't have enough lines or variety, additional credit will have a positive impact on your score over time. 

Again, I am not a financial advisor; I am just sharing what works for me. I've been able to see a 90+ jump, which has been a huge relief. But my credit-building journey is not over!

XOXO

Édith