How do you build credit? For people just starting out, this can be a tough question. You need a good credit history for a satisfactory score, but can’t build that history unless you are issued credit.
Here are some helpful ways to start building a respectable credit score today.
A starter credit card has built-in features that try to protect people from ruining their credit and is a good way to begin building credit. Starter credit cards have higher interest rates and modest spending limits to provide a reasonable starting point for you and the lender.
Another kind of starter credit card is a secured credit card, which requires you to have a bank account containing an amount equal to all or a portion of the credit limit for your card.
Another way to build credit is to inquire about a credit-builder loan. Many lenders offer these to people just starting to build their credit.
The money you borrow will be placed into a savings account, which you can access once you’ve paid off the loan. At the end of the loan term, you get your money and a better credit score.
It’s a win-win—you build credit, the bank makes a low-risk loan and it starts off as the first credit partner of your journey. Keep in mind that credit-builder loans are not widely advertised and are usually found at smaller, local financial institutions or community banks.
There are many ways that healthy savings habits can bolster your credit score. While your salary or savings don’t directly affect your credit score, saving for emergencies will help you pay off any debts and reduce the risk of lowering your credit score by missing payments. By making on-time payments and lowering your debt, your credit score should improve.
One way to build strong savings is to open a high yield savings account with Synchrony Bank. We have FDIC-insured accounts for our customers up to $250,000, per depositor for each ownership category. Our savings account was rated by NerdWallet as the best savings account of 2016.1
Open an account today or call us at 844-345-5789 and start building your credit.
1NerdWallet - July 2016
*ANNUAL PERCENTAGE YIELD (APY): All APYs are accurate as of .
APYs are subject to change at any time without notice. Offers apply to personal accounts only. Fees may reduce earnings. For Money Market and High Yield Savings Accounts, the rate may change after the account is opened. For CDs, a minimum of $2,000 is required to open a CD and must be deposited in a single transaction. A penalty may be imposed for early withdrawals. After maturity, if you choose to roll over your CD, you will earn the base rate of interest in effect at that time. The APY shown for CDs and IRA CDs is for a 60-month CD with a balance of at least $25,000. Click here for all CD rates and terms offered.