Idaho has one of the fastest-growing populations. According to its state government, it could increase by 1.1% annually until 2029. Unfortunately, many of those looking for a home may struggle because of a low credit score or thin credit history.
The data suggests that about 60 million Americans have a thin credit file. The percentage is higher among millennials because of their lack of credit experience and their preference to avoid debt as much as possible.
Granted, they can apply for an FHA loan. Lenders that offer this mortgage often accept applicants with credit scores as low as 500 since the Federal Housing Administration is backing the loan.
But the repercussions of a poor credit score and a thin credit history can be wide-ranging that fixing them is still the best step to take for anyone.
Here are four tips to rebuild credit history and score within a year:
1. Be an Authorized User of a Credit Card
One of the underrated ways to build a credit history is by becoming an authorized user of a credit card. The primary cardholder applies for a credit card but identifies you as an authorized user under their name.
Lenders will consider only the credit information of the primary cardholder during the application, but both of you will receive a credit card. Since you’re just an authorized user, the credit limit is usually lower than that of the primary cardholder.
But it’s already a great strategy to build a credit history. During credit reporting, banks would have to submit the activities of both accounts. Note, though, that if you or the primary cardholder fails to pay the debt on time, the negative record will also appear on both reports.
2. Ask for a Raise
What’s the connection between a raise and a thin credit history? There are a couple:
- Depending on the wage, some may not qualify for a credit card or a loan. Thus, it’s harder to build a credit history.
- Lenders are more likely to feel secure with applicants who have higher salaries since it illustrates they have a better capacity to pay.
- Higher salaries mean you can hasten the repayments of your debts.
Asking for a raise can be nerve-racking, so if you need help, you can get pointers straight from the managers.
3. Check Your Credit Report Twice a Year
Experts will tell you that you better check your credit report once a year. However, if you’re still building your history and trying to boost your score, it may be more ideal to do it twice or every six months.
By sticking to the tips on how to increase your thin credit history, you may already see results within three to six months. Otherwise, the report will give you some ideas if your strategies are working. You can also keep track of the following:
- Are the lenders reporting your payments?
- Are the pieces of information on your credit report correct? Mistakes can also affect your credit score.
- Is your landlord reporting your rentals? Is it the correct amount?
- Does the report show that you pay your debts on time?
- How much information does the report contain?
- Are the data on all credit reports the same? What are the discrepancies?
The United States has three credit bureaus: Experian, Equifax, and TransUnion. All these can give you one free credit report a year. The succeeding reports are not that pricey either. The fees range from a dollar to $16, and it may already include access to your credit score and monitoring.
4. Explore Other Options to Boost Your Credit History and Score
Almost always, the most effective strategy to have a credit history and, ultimately, generate a good credit score is to obtain a debt like a credit card, loan, or mortgage. For many Americans, however, debt can be overwhelming, so they stay away from it.
If you are worried about having to take up a significant loan or own a credit card, consider a credit builder loan. It is a type of debt not offered by banks that helps you borrow a little amount. Usually, it’s just $1,000 or less.
Before you can obtain the money, you have to pay off the loan with interest. Once you complete the process, you already have entries on your credit report and have the amount transferred to your certificate of deposit or savings account.
Experian also offers a “boost” where its system looks into your bank records to collate any on-time payments made on utilities. These include water, telecommunications, the Internet, and even Netflix.
Can one live without a credit history or score? The answer is yes, but the chances of getting affordable loans and other types of debt are slim to nil. While debts can be an issue, they can also be lifesavers, especially during emergencies.