Since the Federal Credit Card Act of 2009, it has become ever more difficult for those who do not have a job, such as stay-at-home parents, to get credit cards. This is because the law limits the access these people have to a credit line. In general, an independent income source is needed to get a credit card, which is important in building credit. Here are some smart ways to build a strong credit rating if you don’t have your own job.
It is possible to become an authorized user on another credit card. If your spouse has a card, ask them to put you on the account as such an authorized user. When you are a user on another account, potential creditors can use those records to see if you have a strong payment history and if you have a low debt-to-credit ratio, which is one of the most important factors in building credit.
Branded credit cards are great for building a strong credit rating. This means a card that is branded for a specific store: Torrid, Best Buy or Home Depot, for example. They have lower qualification terms in general and so tend to be easier to obtain. They also have lower limits, which means you will be less likely to get in over your head by overusing them, and will have an easier time paying them down. They are looked at in the same way as any other credit card when determining your credit rating, however, so they can be a great way to get your score up.
Secured cards are sort of like prepaid cards. You put money into them — say, $1,000 — and you get a line of credit in that amount. This deposit is security against your failure to pay the card down. As you pay them down, you can sometimes raise the limit by increasing your deposit. They can be a great way to build your credit rating and then qualify for a normal credit card down the road.
Use and Pay
You need to use your card for it to build credit. A card that sits empty doesn’t help and can in some ways have a negative impact on your score. This means that to build your credit rating, you have to have activity on that card. Just as important, however, is paying down that balance regularly. Not only will this help to improve your credit score, fast payoff will ensure that you don’t build interest rates, which can be high on high-risk cards.
Buy Here Pay Here
Purchasing a vehicle with a buy here, pay here loan can also build your credit. This option allows you to finance directly through the dealer and pay at their site. The qualifications can be lower than for traditional car loans and can be a great way to build a strong credit rating.
If you think a buy here pay here car loan might be a good option for you, take a look at our resources and get in touch with us for more information today.