Paid for by Experian®:
 

Renting an apartment, buying a car, owning a home. Regardless of whether or not you use credit cards, having a strong credit history can put you on track to reach your financial and personal goals and open up more options for the future. Lenders and landlords look to your credit score to decide whether or not they want to do business with you. If you don't have a score, a lender may decline your application — even if you have great financial habits.

Building good credit begins with knowing where your credit history stands. If you don't yet have a credit history, building one now with the bills you already pay, like your phone bill, can ensure your credit history is ready and available when you need it. Here are some things you may not know about your credit score, with tips and tools on how to begin building it for your future.

1. You don’t have to build credit by yourself

Many people struggle with getting access to credit. But starting your credit journey doesn’t have to be difficult. Get the help you need with the Experian Go, a new program that helps young adults establish their credit and generate a FICO® Score.* With resources to learn about credit and personal finance, tools to help you begin to build your credit and resources to help you navigate the best options for you, you can sign up for credit on your own terms and have access to financial options that can open doors now and in the future.

2. Your credit score is more than just how you use credit cards

“Credit score” encompasses far more than how you might use a credit card. And for many people, their score is built independently of credit card usage. The other types of financial behaviors that may impact your score include any loans, such as student loans, as well as any accounts under your name.

And lenders generally like to see a mix of different types of credit. This credit mix can account for up to 10% of your credit score. This includes revolving credit (such as credit cards) and installment loans (such as mortgages, student loans or car loans). Having a mix of credit can demonstrate an ability to hold different types of credit. And your behavior with both types of loans is important. If you have student loans you’re currently paying back, for example, paying on time will be reflected in your credit score.

3. Ongoing subscriptions may boost your score

From streaming TV subscriptions to your utility bills to your monthly phone bill, the bills you already pay may have the potential to positively affect your score. Experian has a tool, Experian Boost, which can boost your credit scores based on the bills in your name that you already pay — regardless of whether you pay those bills with a credit card or with direct debit.

One thing to note: These accounts have to be in your own name. Having a few recurring bills that you pay can help build your credit and prove your creditworthiness to future lenders. So, while it may be painful in the short-term to kick yourself off your parent’s streaming plan, in the long run, it could help build your credit.

4. You may have more credit options than you think

One of the misconceptions about credit is that you need to have a credit history to have access to credit options, such as credit cards. And it’s true that a solid credit history can be key for qualifying for certain credit cards, but there are still options available, even if you’re building credit or have a limited credit history.

The first option is a secured credit card. This card requires a cash deposit as collateral, which is usually equal to the card’s limit. If approved, the card then operates like a normal credit card — and following good credit habits can help build your credit score. For example, if you have a secured credit card with a $200 credit limit, then it’s a good idea to keep your credit utilization rate (the amount you charge in comparison to your credit limit) relatively low, rather than charging up to $200 every month. It’s also a good idea to make sure to pay your bill on time each month. Over time, you may be able to convert a secured credit card into an unsecured card, depending on your issuer.

Another option may be a retail card from a store you frequent. Retail credit cards often offer store perks, like discounts. They can also have high interest rates and low limits. But although they may be easier to qualify for if you’re still building credit, just know that retail cards may not be accepted everywhere, and high interest rates can add up if you carry a balance month to month. Still, using the card for small purchases, paid off each month, may help build your credit to potentially qualify for a traditional credit card.

5. Your family can help build your credit score

If your parents, grandparents or friends use credit cards responsibly, they may be able to help you get a leg up in building your own credit. By adding you as an authorized user to their account, you can benefit from their credit habits.

Your behavior as an authorized user depends on the agreement you make with the actual cardholder. Sometimes, the original cardholder will allow authorization only for credit building purposes. Others may work out a payment agreement or will have an agreement that the card can be used for certain purchases, like books or trip arrangements to visit family. And remember: Being an authorized user means your credit score is tied to their behavior. This can work to your advantage if the cardholder is responsible, but it can also potentially hurt your score if they have a history of late payments or other negative credit behaviors.


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From Experian:

Experian is committed to helping you protect, understand, and improve your credit. If you’re new to credit, Experian is introducing a free program tailor-made for you to quickly and easily begin your own personal credit journey. With our free app, you can see your credit information in an easy-to-explore format. Your credit and debt summary includes how much you are spending, how much debt you have, what your credit limits are, and how it all affects your credit utilization. View your Experian Credit Report and FICO® Score* any time, anywhere on your phone or tablet. Includes Free access to Experian BoostTM, Experian credit monitoring with alerts. No purchase necessary. Learn more and download the app at Experian.

Average users who received a boost improved their FICO® Score 8 based on Experian Data by 13 points. Some may not see improved scores or approval odds. Not all lenders use credit information impacted by Experian BoostTM.

*Credit score calculated based on FICO® Score 8 model. Your lender or insurer may use a different FICO® Score than FICO® Score 8, or another type of credit score altogether. Learn more.