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The Best Ways to Build Credit Fast

The Best Ways to Build Credit Fast

Good credit is an important part of life and for those young adults who need student loans for college, their first car, or a new home, the lack of a credit history can be a problem. There are quick ways to build good credit and establish a positive credit history. Responsible financial habits, when established early, can ease the transition to adulthood and financial independence.

Here are the best ways to build a good credit score fast.

Why You Need To Build Credit

As a young adult or recent college graduate you may be wondering why it is important to build credit in your early 20’s. If you needed financial aid and student loans to get through college then you likely had your parents co-sign your debt, meaning the financial institution who issued your funds was willing to overlook your lack of credit history. However, as the real world looms and your parents are no longer offering you a financial cushion, getting credit can prove to be more challenging.

Due to the lack of financial education in the United States, many millennials who are just starting out in the world may not realize how crucial a good credit score history is to financial security and independence. Here are just a few ways your credit score is used and why you need to build your credit fast.

  • Credit Card Companies– Credit card issuers use your credit history to approve or decline applications. Once you are approved, a credit score can determine how high or low your interest rates are. Similarly, if you need more credit to purchase higher-priced items, you may need a credit limit increase.
  • Home Loans and Mortgages– These are likely the largest purchases you’ll ever make. The interest you pay on your mortgage will amount to hundreds of thousands of dollars, depending on where you live. Because of the amount of a home loan, a higher interest rate due to a low credit score or bad history can cost home buyers tens, if not hundreds, or even thousands more in interest payments.
  • Auto Loans– When buying a new or used car, most adults often finance their purchase. The final amount you pay for this depreciating asset should be as low as possible to help you divert extra cash to other activities that actually create wealth, such as investing. Your credit score and history may either earn you a no-interest loan or overburden you with higher monthly rates.
  • Getting A Job– Many employers check your credit score to determine your financial habits. The idea is that a financially responsible individual who manages his/her own finances well is likely to be a better employee.
  • Car Insurance Coverage– No one likes paying insurance premiums, yet auto insurance is mandatory in the United States. Furthermore, statisticians have found a positive relationship between people with high credit scores and safe driving. For this reason, the best car insurance companies in most U.S. states check your credit score to determine your insurance rates, offering a discount to drivers with strong credit.
  • Business Loans– Buying a business tends to be the surest way to financial independence in the United States. However, as a first-time business buyer most purchases require the cooperation of the Small Business Administration (SBA). SBA loans often require a sizable as well as a strong credit history to get approved. Having no or bad credit can be the difference between the ability to buy a business and being forced to pass up an incredible financial opportunity.

Now that you know why you should care about building up credit, let’s discuss how to actually do it!

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It Starts With Your Job

In order to build credit and establish a history, an individual must have a stable income and for most people that means getting and keeping a job. Whether the job is part or full time, an employment history is the first step to building credit.

It is important to remain employed at the same job for at least a year unless, in the case of students, the job is temporary or seasonal. Jumping from job to job causes your income to be unstable, making it difficult to get credit.

Open Bank Accounts

High school and college students can establish checking and savings accounts at local banks or credit unions. While having bank accounts will not improve your credit score, it will establish you as a customer and may make it easier to obtain credit through your financial institution.

It is also important to maintain the accounts in good standing since overdrafts can have a negative impact on your relationships with the bank. With a savings account and a decent income most people over age eighteen can obtain a secured credit card or loan.

Apply for Secured Credit Cards

Debit cards, which are issued with checking accounts, do not report to credit bureaus and will not build your credit history. A secured credit card has a credit limit equal to the amount in a savings account that is used to ensure the principal of the loan will be paid if the account holder defaults on the payments.

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These credit card companies make regular reports to credit agencies and can improve your credit score and establish a payment history. The money in the savings account that secures the card cannot be withdrawn unless the card is paid off and cancelled.

Like other credit cards, secured cards have monthly payments that must be made on time to build a good credit history. The best strategy may be to use the card only for essential monthly expenses and to pay it in full each month.

Interest rates on secured cards can be high and by paying the card off each month, cardholders avoid paying interest while their timely payments improve their credit score and build a good credit history.

Consider Secured Loans

The first loan many young adults obtain is a car loan which is a type of secured loan. The loan is secured by the value of the car and if the debtor does not make the payments when they are due, the lender repossesses the vehicle.

As a rule, banks and credit unions offer lower interest rates on car loans than finance companies. Plus, being a customer of the bank you get the loan from increases your chances of being approved.

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Paying off a car loan is a great way to build a credit history fast, but it is important to keep monthly payments affordable. Include the cost of full coverage car insurance when deciding how much you can spend on a new or used car. Lenders require full coverage as a condition of the loan.

Getting Unsecured Credit Cards

Once you have established a good payment history for about one year you can apply for unsecured credit cards. If you already have a relationship with a bank, you are more likely to be approved for unsecured credit through their credit department.

The credit limit on unsecured cards is based on your credit score, payment history, income, and outstanding debt. Just as with secured cards, it is important to pay these cards in full each month to show responsible spending habits.

Shop around before applying for a credit card. Different cards may have different interest rates and some have rewards programs that offer cash back on everyday purchases. You should also consider the fees that apply to the cards since some have annual fees while others may charge high transaction fees, especially for cash advances.

Choose a card that fits your spending and lifestyle habits. It may be better to apply for a card with a higher interest rate and a good rewards program if you intend to pay off the full balance every month.

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Automate Your Payments

If you forget to pay your bills on time it can hurt your credit history. Automating payments insures that all your bills get paid when they are due. There are two options for making automatic payments. You can either:

  • authorize your bank to release the funds from your checking account on receipt of an electronic bill, or
  • you can charge the payments to a credit card and pay off the credit card bill each month.

Using a credit card will improve your credit score and help build your credit history as you pay your regular monthly expenses.

Do Not Apply for Multiple Loans or Credit Cards

If you apply for several credit lines at once, it will have a negative impact on your credit score and can hurt your credit history. It is better to apply for one line of credit and allow some time between credit applications.

Each time a lending institution pulls your credit report, it lowers your credit score unless you are comparison shopping for a single loan (e.g. auto loan) and apply through all the lenders within a 30 day period. This would be considered a single inquiry for your credit report.

Instead of applying for new credit cards, request an increase of the credit limit on the cards you already use. Nearly one third of your credit score is based on the ratio of your available credit to your actual debt. If you have a high credit limit with a low debt balance, it raises your credit score.

Even if you do not plan to use the additional credit, it is smart to apply for the increase since it will improve your score and credit history.

Final Word

It usually takes between one and three years of good payment habits to establish a credit history. A good credit score can help young adults who are seeking full time employment and housing for the first time since employers and landlords often pull credit reports when considering applicants. If you build your credit history fast and early, you will have a good head start on your financial future.

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Gary Dekmezian

Entrepreneur

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Last Updated on July 4, 2019

25 Killer Sites For Free Online Education

25 Killer Sites For Free Online Education

Whether you’re five or ninety five, the internet has a lot to offer. Particularly when the topic is education, the resources on the internet are endless.

Best of all, many high quality sites are completely free. From history to coding, excellent free online education awaits on the following 25 sites.

1. Coursera

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    Coursera is a website that partners with universities and organizations around the world. This brings a wide variety of topics and perspectives to one searchable database.

    Coursera is a powerful tool for free online education, and includes courses from many top universities, museums and trusts. This gives the site an extremely wide range of in-depth courses.

    Coursera is extremely useful if you’re looking to study many different topics, or want courses from different schools and groups.

    2. Khan Academy

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      Partnering with many post secondary schools, Khan Academy offers a useable, well organized interface. Also curating many courses from around the web, Khan Academy offers impressive depth on many different subjects.

      Among the more well known educational sites, Khan Academy is also incredibly useable, which may make it easier to keep learning goals.

      3. Open Culture Online Courses

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        If you are struggling to find exactly the material you are looking for, try Open Culture’s listing of free online education courses. The page highlights 1000 lectures, videos and podcasts from universities around the world. The site features a lot of material found only on universities private sites, all in easy to browse categories. This means you can find hundreds of university courses, without having to visit and search each university’s own site.

        Open Culture’s list features courses from England, Australia, Wales and many state universities around the United States. A very helpful resource for finding many courses in one area of study.

        4. Udemy 

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          Udemy’s free courses are similar in concept to Coursera’s but additionally allows users to build custom courses from lessons.

          Working with many top professors and schools, the site mixes the customizable platform of other sites with a heavy emphasis on top quality content. This is another site however, that mixes free and paid content.

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          5. Academic Earth

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            Another site with courses from many different schools is Academic Earth. Much like the three sites above, Academic Earth brings together top notch courses from many different sources, and focuses on offering a wide variety of subjects.

            Academic Earth lists courses by subject and school, so it might be easier to find what you’re looking for.

            6. edX

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              Another great option for free online education is edX. Also bringing together courses from many different schools, the site has impressive, quality information for everyone. edX covers a great range of topics.

              7. Alison

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                Unlike the previous sites on this lists, Alison is a free education site offering certification in some areas. Alison offers courses mainly in business, technology, and health, but also includes language learning courses.

                It’s a great option if users need certification for their learning as Alison also offers school curriculum courses.

                8. iTunesU Free Courses

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                  A very convenient place for free online education is iTunesU, because it integrates seamlessly with your iPod, or any app-ready Apple mobile device. On iPad, iPhone, or iPod touch, users download the iTunesU app.

                  Desktop users can access  iTunesU on the upper right hand corner of the iTunes Store. iTunesU is also convenient because the store is categorized much like iTunes.

                  Users can search learning materials in many different ways, including genre and topic. However, courses are often a mix of free podcasts or videos, and paid content.

                  ITunesU does include courses on a pretty wide scope of topics, but does not integrate with Android, Google or Windows mobile devices.

                  9. Stanford Online

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                    Your hub for all the online offerings from Stanford University, Stanford Online offers self-paced and session based courses. While Coursera features some courses from Stanford, many classes are only available via other hosts. Some courses require iTunes, but most are completed in your web browser.

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                    Stanford Online is a great site for high quality courses, though the topics are somewhat limited compared to sites partnered with more than one school.

                    10. Harvard Extension

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                      Like Stanford Online, Harvard Extension features free online education courses from Harvard only. This is another excellent source for top notch course material, though the course variety is less rich than multi-school sites.

                      Additionally, Harvard Extension allows you to search for courses by professional certificate. This makes it much easier if your online education goal includes certification.

                      11. Open Yale Courses

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                        Open Yale Courses echoes Harvard Extension and Stanford Online, in that it offers only courses from Yale. While the site is similarly limited to topics taught at the school, Open Yale Courses offers a lot of videos of actual campus lectures. The availability of videos makes the site a great option if you’re looking for quality courses, but learn better by watching than by reading.

                        12. UC Berkeley Class Central

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                          Much like the other schools on this list, UC Berkeley has a variety of free online education options. The school has slightly fewer courses than the schools above, but includes some supplementary lectures, webcasts and RSS Feeds, making it easy to keep up with the topics you choose.

                          13. MIT OpenCourseWare

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                            Similarly, MIT offers a variety of free courses. The school has a comparable number of courses to the schools above, plus includes very in-depth course materials on the subjects available. MIT also offers free RSS feeds, a convenient way to continue learning.

                            14. Carnegie Mellon Open Learning Initiative

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                              Carnegie Mellon’s free online education site is comparable with the other school’s on this list, however, Open Learning Initiative also covers a smaller range of topics. But for the topics that are covered impressive, in-depth material is available.

                              15. Codecademy

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                                Codecademy is a website dedicated specifically to teaching coding. Where other coding sites follow an example/practice session workflow, Codecademy includes a live practice window. This means you can practice coding while still viewing the lesson material.

                                The courses at Codecademy are well written and easy to follow and the website is organized very nicely. Codecademy features a centralized dashboard where you can monitor your progress, plus organizes lessons into complete modules. This lets you learn an entire language without needing to pick the next course manually.

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                                16. Code

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                                  Code is another website focused on coding and app writing. A site with high quality courses, Code also features learning options for kids.

                                  In addition to kid friendly courses, Code offers free online education classes on a wide variety of technology topics. These classes include app writing, robotics and Javascript.

                                  Most of the courses are also geared in a such a way that they can be useful in a classroom setting. This makes Code a great resource for harder to find coding topics, as well as various learning settings.

                                  17. University of London Podcasts

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                                    The podcast page on the University of London website is another great source for free education. While the courses are limited to podcasts, the site features podcasts from it’s own campus, as well as eleven universities in and around London. This gives learners a wide base of topics and lectures, but still ensures in-depth material.

                                    18. University of Oxford Podcasts

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                                      Similar to the University of London, the University of Oxford features many different podcasts. Most are public lecture series or lectures from visiting professors, with several different recordings available.

                                      The advantage to this particular site is that podcasts are organized into series, making it easy to subscribe to multiple lectures on one topic. Another good site for thoroughly in-depth lectures.

                                      19. BBC Podcasts

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                                        For the more casual learner, the BBC offers a wide variety of podcasts on many different topics. Most podcasts are updated weekly, and focus on everything from finance, to sports, to current events.

                                        Through the World Service line of podcasts, there are also many in different languages. The focus of these podcasts are less in-depth and theory based, which may be more accessible to the average person.

                                        20. TED-Ed

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                                          Another great destination for more general learning is TED-Ed. From the same people that brought you the all encompassing, motivational web series, comes a site chocked full of educational videos. Most include impressive animation, and all are ten minutes long or less.

                                          Not only is TED-Ed an excellent site for the curious, it also includes supplemental materials and quizzes on the videos. This makes the site extremely useful in formal education settings, as well as in entertaining ways to brush up on new discoveries and topics.

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                                          21. LessonPaths

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                                            LessonPaths is another great tool for those looking for a more usable and convenient way to access learning material. On this site, users create link playlists of their favorite learning materials from other sites. Users then rank these collections, making it easy to find many different high quality, accessible sources on a given topic.

                                            22. Memrise

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                                              Another impressive free online education site offering ease of use and convenience is Memrise. Available both on desktop and as an app, Memrise is a particularly powerful tool if you are studying a language. The site encompasses many other topics as well, though some of the course material is user generated content.

                                              Part of what makes Memrise special is their integration of games into the learning materials, mixing learning with entertainment.

                                              23. National Geographic Kids

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                                                The kids site for National Geographic is another site that makes free online education applicable for younger users. For those looking for kid friendly education, a large variety of games, puzzles, videos and photos keeps kids interested on this site.

                                                National Geographic Kids doesn’t organize learning into courses, making materials available by topic and medium instead. This makes National Geographic Kids a good option for those looking for a more casual learning environment.

                                                24. Fun Brain

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                                                  Fun Brain is another good option for kids who want to learn online, but focuses on games and fun puzzles. Particularly focused on math and reading, Fun Brain’s game based approach can be valuable if the child in question struggles to pay attention.

                                                  Fun Brain offers rewards and challenges as well, and is another site aimed at a casual learning experience for kids K-8.

                                                  25. Whyville

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                                                    Similar to the sites for kids free online education is Whyville a destination for preteen online learning. The site includes a variety of social features, with a focus on learning materials geared for young teens.

                                                    Whyville also mixes in educational games, to make the site a well rounded option for kids too old for simple games, but too young for heavy reading based material.

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                                                    Featured photo credit: Dai KE via unsplash.com

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