College graduates saddled with student loans may find this hard to believe, but there is one upside to having to pay back all that debt: It helps you build credit.
That may seem like a small consolation â particularly if the balances you owe areÂ even averageÂ âÂ but credit can be hard to come by. Of course, all hope isn’t lost for those who don’t have student loans.
Here are some ways to build credit without that kind of debt.
1. Get a Secured Credit Card
The Credit Card Accountability Responsibility and Disclosure (CARD) Act prohibits lenders from givingÂ credit cards to anyone under 21 who doesn’t have a willing co-signer orÂ a demonstrated ability to repay, but if you’re over that age or you have a source of income, you can apply for some entry-level plastic.
Secured credit cards â which require you to put down a deposit that serves as your credit line â are specifically designed to help people repair or build credit. These cards generally require a deposit to “secure” the limit of the credit card. (You can go here to learn more about the best secured credit cards in America.)
There are also student credit cardsÂ geared to young borrowers thatÂ could be worth considering. The better ones have low credit limits that can keep new borrowers out of trouble and tout rewards or alerts designed to build smart-spending habits.
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2. Become an Authorized User
If you can’t qualify for a credit card, you may want to see if a parent, guardian or family friend is willing to add you as an authorized user to one of their credit cards. Authorized users aren’t responsible for paying off an account, but will get credit (pun intended) for any good activity associated with it. Just be sure to have the primary cardholder check if the issuer reports authorized users to the major credit bureaus,Â since not all of them do so.
3. Take Out a Credit-Builder Loan
An alternative to starter credit cards, credit-builder loans, offered by some credit unions and banks to help people improve their credit, allow you to borrow a nominal amount (often $1,000 or less) and make payments for 12Â toÂ 24 months. The payments are deposited in an interest-bearing CD or savings account. These loans typically have relatively low interest rates and can help people with a thin credit history develop a more solid credit profile as long as on-time payments are reported to the three major credit reporting agencies. (Again, you may want to check this ahead of time.)
4. Apply forÂ a Personal Loan
You may be able to qualify for a personal loan. These installment loans do not require collateral and typically have slightly higher interest rates than secured loans. A bank or credit union that you have a relationship with may be willing to extend financing, thoughÂ you mayÂ beÂ asked to getÂ a co-signer.
5. Establish Good Habits
Of course, you’ll only build good credit if you use any financing you are able to obtain wisely. You can establish a good credit score over the long term by making all your payments on time, keeping debt levels lower thanÂ 30%Â (ideally 10%) of your total available credit limit(s), and adding a mix of credit accounts (revolving lines, like credit cards, and installment loans, like an auto loan) as your score and wallet can handle them.
You can trackÂ your progress by viewing your two free credit scores each month on Credit.com. If you make a misstep, you may be able to fix your credit by disputing errors on your credit report, identifying your particular credit score killers and coming up with a game plan to address them.
More on Credit Reports & Credit Scores:
- The Credit.com Credit Reports Learning Center
- Whatâs a Good Credit Score?
- How to Get Your Free Annual Credit Report
The post How to Build Credit Without Student Loans appeared first on Credit.com.
In its first meeting for 2021, and its first one during the Biden administration, the Federal Reserveâs rate-setting body voted to hold its target interest rate steady in the 0% to 0.25% range.
This means there is not likely to be much upward movement in variable credit card interest rates, which are typically tied to the Fedâs target interest rate, or the fed funds rate.
The Fed will also continue with its purchases of at least $80 billion in Treasury securities and $40 billion in agency mortgage-backed securities every month to further support the economy.
See related: What to expect from Biden, Harris on financial policy
In a media release, the Federal Open Market Committee said, âThe pace of the recovery in economic activity and employment has moderated in recent months, with weakness concentrated in the sectors most adversely affected by the pandemic. Weaker demand and earlier declines in oil prices have been holding down consumer price inflation. Overall financial conditions remain accommodative, in part reflecting policy measures to support the economy and the flow of credit to U.S. households and businesses.â
The course of economic growth will depend on how effectively the pandemic is reined in, including with the use of vaccinations. Meanwhile, the Fed will aim to maintain its almost 0% target rate until it deems the economy to have attained âmaximum employmentâ and inflation outpaces its 2% target for a while.
The Fedâs aim is for inflation to overshoot its 2% target for a while so that average inflation remains around 2%, considering that inflation has been running below target for several years now.
In a related press conference, Fed Chairman Jerome Powell noted that there are positive signs for the economy going forward, and a number of forecasts call for a stronger economy in the second half of the year because of vaccine rollouts and fiscal stimulus. He expects that âwidespread vaccinations would enable us to putÂ the pandemic behind us.â
Powell added that thereâs ânothing more important to the economy right now than people getting vaccinatedâ since that will enable everyone to get back to work. He himself has had his first vaccination shot and expects to be getting a second one soon, he mentioned.
However, he sees the pandemic as still presenting âconsiderable downside riskâÂ to the economy considering that no one knows how the vaccination rollout will go. Given this, the Fed has set its policy to be accommodative until it actually sees economic improvement.
See related: Millennials defer debt payoff, tap savings in pandemic
Full employment recovery a long way off
Considering that the shock from the pandemic âwas unprecedented both in terms of its nature and its size,â in modern history, the economy is still at least nine million jobs short of maximum employment, according to Powell. He also noted that the real unemployment rate is at least 10% taking into account people who have dropped out of the labor force.
He is concerned about any potential long-term damage from unemployment to people, which will ultimately prevent the U.S. economy from achieving its full productive potential.
Powell also pointed to racial disparities in terms of employment gaps, wealth gaps and home-ownership gaps that âeven controlling for many other factors, theyâre persistent and difficult to explain.â Broader prosperity for everyone is important since the Fed wants the âpotential output of the economy to be as high asÂ possible.â
See related: Pandemic pins parents under financial strain: Survey
Fed doesnât see transient inflation rise as a threat
Although there could be a rise in inflation as the economyÂ reopens, Powell expects this to be transient and not âtroubling inflation.â The world has been facing âdisinflationary pressuresâ for a while now, and Powell is more concerned about any damage to people and the economy from tightening its monetary policy too soon than about fighting off the possibility for higher inflation.
He also doesnât see risks to financial stability as high, based on asset prices and the use of debt by the banking system, businesses and households. News about vaccines and fiscal policy is what is driving asset prices, as he sees it.
Itâs premature for the Fed to think about rolling back its securities purchases and start being less accommodative, according to Powell. The Fed has learned a lot from its experience after the global financial crisis and the âtaper tantrumâ that ensued after it decided to start tightening its monetary policy during that recovery.
Accordingly, it will communicate its policy stances well in advance and be transparent this time around. âItâs too soon to be worried. When it comes (time) to exit, we know how to do that,â Powell said.
Love to travel? Good news: There are ways to put thatÂ wanderlust to use with a travel rewards credit card.
Though travel rewards cards aren’t the easiest to get approved for as they require an excellent orÂ good credit score, those who are able to snagÂ oneÂ can use itÂ to build better credit. (Just remember, before you apply it’s important to know where you stand so you don’t get turned down only toÂ seeÂ your score suffer as a result of the inquiry.)
Travel Rewards Cards & Credit
A travel rewards credit card lets accountholders earn points or miles that can be put towards hotel stays, airfare and other travel expenses.Â These rewards can help travelers lower the cost of vacations, andÂ the card itself canÂ be a good toolÂ for building credit.
If you make payments on time, eventually your score will begin to rise because this behavior createsÂ a positive payment history, anÂ important factor inÂ credit scoring models. The card’s credit limit will also countÂ toward your credit utilization rate, which is another bigÂ factor in scoring models. Your credit utilization rate is how muchÂ debt you carryÂ versus your total available credit. For best credit scoring results, it’s recommended that youÂ keep your debt below 10% and at least 30% of your credit limit(s). So if you charge aÂ vacation and then pay most or all of the purchases off right away, your score could benefit.
You can keep track of how your usage and payments are affecting your credit by signing up for Credit.com’s free credit report summary. Beyond seeingÂ your credit scores, you’ll be able to checkÂ how you’re doing in five key areas of your credit report that determine your credit score, including payment history, debt usage, inquiries, credit age and account mix.
Since interest rates for travel rewards cards tend toÂ vary depending on creditworthiness, you’ll want to be mindfulÂ about carrying a balance. Doing so could hamper your credit goals, and the interest you pay could exceed whatever you’ve managed to glean from rewards. Many travel rewards cards carry annual fees, too, so you’ll want to make sure your spending habits justify theÂ potential cost. (You can read about the best travel credit cards in America here.) Of course, making purchases on your card and paying them off quickly (and on time) will generally boostÂ your credit.
Remember, if your credit is looking a little lackluster and you’re having a hard time qualifying for any type of credit card, you may be able to improve your scores by disputing errors on your credit report, paying down high credit card balances and limiting new credit inquiries until your score bounces back.
[Offer:Â If you need help fixing errors on your credit report, Lexington Law could help you meet your goals.Â Learn more about them hereÂ or call them atÂ (844) 346-3296Â for a free consultation.]
More on Credit Cards:
- Credit.comâs Expert Credit Card Shopping Tips
- How to Get a Credit Card With Bad Credit
- An Expert Guide to Credit Cards With Rewards
The post How to Use Your Wanderlust to Build Credit appeared first on Credit.com.
Many rewards credit cardsÂ offer the opportunity to earn a sign-up bonus. Even some no-annual-fee credit cards offer them, allowing consumers to maximize cash back or points without paying every year for simply having the card.
The Apple Card only started offering a sign-up bonus in June, when Apple cardholders could earn $50 in Daily Cash after spending $50 at Walgreens. This was followed by offers in September, October and November, most recently including aÂ $75 sign-up bonus after spending $75 at Nike in-store and online via Apple Pay.
And now through Jan. 31, new Apple Card holders can score a slightly lower sign-up bonus. You’ll get $50 in Daily Cash after you spend $50 or more on purchases with Exxon or Mobil.
See related: Apple Card: One year later
How to get the Apple Card sign-up bonus
New Apple Card holders who open an account between Jan. 8 and Jan. 31, 2021 can earn $50 in Appleâs Daily Cash when they spend $50 using Apple Card with Apple Pay (where available) at Exxon and Mobil stations at the pump or at attached convenience stores in the U.S., within 30 days of the account opening. To pay at the pump with Apple Pay, you can use either the Exxon Mobil Rewards+ mobile app or contactless payment.
This month’s sign-up bonus from Apple is lower than its previous offer from Nike, but on par with the older offers from Walgreens and Panera Bread, both of which got you just $50 in Daily Cash back after a matching spend.
You can apply for the Apple Card from the Wallet app on your iPhone.
Should you apply for the Apple Card now?
If you have been considering applying for the Apple Card, it might be a good idea to do so this month, especially if you commute or drive often enough to spend $50 at gas stations in a month. While the card doesnât always come with a sign-up bonus, new cardholders currently have a great chance to earn one.
Besides that, the Apple Card offers 3% cash back on Apple purchases, as well as 3% cash back when you use Apple Pay for Walgreens, Nike and Uber and Uber Eats purchases and at T-Mobile stores. Other Apple Pay purchases will earn you 2% in cash back. When you use the physical card, the cash back rate goes down to 1%.
However, the Apple Card might not make sense for everyone. The earning rate is good on Apple purchases, but if youâre looking for a primary cash back card to add to your wallet, there might be better options.
For example, with the Blue Cash Everyday® Card from American Express you can earn 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%) and 2% cash back at U.S. gas stations and select U.S. department stores. All other purchases will get you 1% in cash back.
Another alternative is the Capital One Quicksilver Cash Rewards Credit Card, which earns you unlimited 1.5% cash back on every purchase and doesnât have an annual fee. Plus, you only need to spend $500 in the first three months with the card to earn its $200 sign-up bonus.
There are quite a few other cards to look into. Shop around before you decide to take advantage of Appleâs offer. The sign-up bonus alone shouldnât tempt you into signing up for a card that doesnât align with your spending.
See related:Â Apple card credit score requirements and reasons for denial
If youâre an Apple enthusiast and have been looking into the Apple Card for some time, now might be a good time to apply. The new limited-time sign-up offer gives you an opportunity to earn an easy sign-up bonus â something the card doesnât normally have.
Good credit is essential if you hope to borrow money one day for things like a new carÂ or home. But good credit can also be important for smaller things like renting an apartment or even landing a new job. And one of the easiest ways to build the credit necessary for these things is by getting aÂ credit card.
If you have no credit, or even bad credit, and you’re averse to getting a secured credit card to help improve your credit, there are other ways to go about establishing and building good credit.
Here are three otherÂ options for building credit andÂ improving your credit scores.
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1. Get a Credit-Builder Loan
A credit builder loan is a loan with a set amount you pay back over a set period of time (referred to as an installment loan). Most have repayment terms ranging from six months to 18 months, and because theseÂ loans are reported to one or more of the three national credit reporting agencies, on-time payments will help build up your credit.
Hereâs how it works: A lender places your loan into a savings account, which you canât touch until youâve paid it off in full, allowing you to build credit and savings at the same time. And because loan amounts for credit builder loans can be quite small (just $500) it can be much easier to make monthly loan payments.
Credit-builder loans are best for peopleÂ with no credit or bad credit. But, if you have good credit but don’t have anyÂ installment accounts on your creditÂ report, a credit-builder loan could potentially raise your score since account mix is another major credit-scoring factor.
2. Pay Your RentÂ
If you’re in the process of moving or need to do so in the near future, it’s a good idea to find a landlord who reports your rent payments to the major credit bureaus. Depending on what credit report or credit score is being used,Â theseÂ on-time monthly rent payments can give you a quick and easy credit reference and help you qualify for a loan (or at least another apartment down the road).
3. Become an Authorized User
Asking your spouse, partner or even your parent to add you onto one of their accounts as an authorized user could give your credit a boost. If the account they put you on has a perfect payment history and low balances, youâll likely get âcreditâ when that account starts appearing on your credit reports. You wonât necessarily need to use the card to benefit from this strategy. It is a good idea to have your friend or family member check with their issuer to be sure that it reports authorized users to the three major credit reporting agencies (not all do).
Remember, one of the most important things in building good credit is making timely loan and bill payments. Bills like rent or utilities may not be universally reported to the credit bureaus, but if they go unpaid long enough, they can hurt your credit, especially if they go into collection. (You can see how any collections accounts may be affecting your credit by viewing your two free credit scores, updated every 14 days, on Credit.com.)
If your credit is in rough shape, due to a collection account or other payment history troubles, you may be able to improve your scores by paying delinquent accounts, addressing high credit card balances and disputing any errors that may be weighing them down. And remember, you can build good credit in the long term by keeping debt levels low, making timely payments and adding to theÂ mix of accounts you haveÂ as your score and wallet can handle it.
[Offer:Â If you need help fixing your credit, Lexington Law can help you meet your goals.Â Learn more about them hereÂ or call them atÂ (844) 346-3296Â for a free consultation.]
More on Credit Reports & Credit Scores:
- The Credit.com Credit Reports Learning Center
- How to Get Your Free Annual Credit Report
- How Credit Impacts Your Day-to-Day Life
Image:Â Jacob Ammentorp Lund
The post I Don’t Need a Credit Card But Want to Build Credit. What Can I Do? appeared first on Credit.com.
In response to the coronavirus pandemic, major credit card issuers are offering relief to their customers.
Even though many places around the country are open, the pandemic continues to impact the U.S. economy. Workers are still at risk of being laid off or facing reduced hours or pay.
“This is a rapidly evolving situation and we want our customers to know we are here to provide assistance should they need it,â Anand Selva, chief executive officer of Citiâs consumer bank, said in a statement in Spring 2020.
At the same time, scammers are now trying to take advantage of coronavirus concerns by sending out fake emails about the virus that are designed to steal consumersâ personal and financial information or to infect their computers with malware.
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Many credit card issuers are allowing customers to opt into financial relief programs online. These programs are a convenient way to access short-term relief. But it could come with a long-term cost as many cardholders will continue to see interest accrue. With the average credit card interest rate sitting at 16.05%, cardholders might find more cost-effective relief through other options.
Here’s what issuers are currently offering:
Cardholders who are having difficulties can get assistance through American Express’s financial hardship program. Eligible cardholders have the option to enroll in a short-term payment plan, which provides relief for 12 months, or a long-term plan, which can provide relief for either 36 or 60 months.
Under both options, you will receive lower interest rates, plus waived late payment fees and annual fees. But you might not have access to certain card benefits and features.
If you enroll in the short-term plan, you might be able to continue putting new purchases on the card but with a reduced spending limit. If you are participating in the long-term plan, you will not be able to use the card.
Amex will report participating cardholders to the credit bureaus as current, assuming they comply with the program’s rules. But the program’s terms do offer some important caveats: Amex will inform the credit bureaus that you are enrolled in a payment assistance program (if you’re in the long-term plan). And under both plans, Amex will report that you have a lower credit limit.
While these factors do not have as much of an impact on your credit score as a delinquent account does, it could still signal to other lenders that you might be having some financial hardship.
Bank of America
Bank of America cardholders who have trouble paying credit card bills can request a credit card payment deferral by calling the number on the back of their card.
To qualify for payment assistance, cardholders must be carrying a balance, according to the website.
Bank of America sent an email to Preferred Rewards members in May 2020 stating that the company had temporarily suspended the annual program review process. Members whose assets dropped below the regular threshold to keep their status would continue to qualify for program benefits. It is unclear if Bank of America is still suspending this program.
Barclays urges credit card account holders to request payment relief online. As of May 4, 2020, the bank is granting payment relief for two statements, but interest will continue to accrue.
âWe understand that this is a time of uncertainty for many people, and we know that there may be instances where customers find themselves facing financial difficulties. Capital One is here to help and we encourage customers who may be impacted to reach out to discuss how we might be of assistance,â the bank said in a statement.
In a March 26, 2020 update, Chairman and CEO Rich Fairbank confirmed that they are offering waived fees and deferred payments on credit cards for some cardholders.
Because each customerâs situation is different, the bank encourages customers to contact it directly. To contact Capital One customer service about an existing account, call (800) 227-4825.
See related: How to clean your credit card
Previously, Chase Bank stated that customers will be able to “delay up to three payments on your personal or business credit card” if needed, with interest continuing to accrue. The website currently does not specify how many payments cardholders can defer.
It also stated that active duty military members who are responding to a disaster might have access to additional benefits. Servicemembers can call the bank for more information.
In a letter to shareholders, the company’s CEO, Jamie Dimon, also promised to not report late payments to the credit bureaus for “up-to-date clients.”
See related: Chase offering limited-time bonus on food delivery for some cardholders
Citi customers who have been impacted by the coronavirus pandemic might be eligible for assistance. Previously, the bank was waiving payments and late fees for two consecutive billing cycles. However, Citi has ended its pandemic assistance program.
“Due to a significant and steady decline in enrollments, our formal COVID-19 assistance program has concluded and we will focus on providing assistance options to those customers financially affected by COVID-19 on a case-by-case basis. We continue to closely monitor the situation and will evaluate additional actions to support our customers and communities as needs arise,” a spokesperson for Citi said in an email.
During the bank’s pandemic assistance program, interest continued to accrue, but accounts that were current at the time of enrollment were not be reported as delinquent.
Discover will be extending relief to qualified customers who are experiencing financial difficulty caused by the spread of COVID-19.
“We encourage them to contact us by calling and are directing them to www.discover.com/coronavirus for phone numbers for each product line and other FAQs,” Discover said in a statement earlier this year. “We also can provide relief through our mobile text app, which connects a customer directly with an agent.”
Discover it Miles cardmembers can also put their miles towards their bill â including their minimum payment.
See related: What to do if you can’t pay your business credit card bill
Apple Card customers can enroll in an assistance program. Previously, cardholders could waive payments without accruing any interest. The website currently doesn’t specify if this is still the case.
Cardholders can defer payments for three billing cycles. Though interest will continue to accrue, enrolled cardholders will not receive late fees, and their accounts will be reported as current, as long as accounts were not delinquent at the time of enrollment.
Synchrony is extending relief to customers experiencing financial hardship. The company’s website previously stated that this could include payment relief for up to three statement cycles, while interest would continue to accrue. The website currently offers no specifics about what the issuer is prepared to offer.
Truist (formerly SunTrust and BB&T)
Previously, Truist offered payment relief assistance to customers with personal and business credit cards, among other products. As of April 14, it was willing to delay payments for up to 90 days. The website currently offers no specifics about what the issuer is prepared to offer.
Previously, impacted cardholders could defer monthly payments for two consecutive billing cycles. The company’s website currently does not specify what assistance cardholders can expect to receive.
See related: Coronavirus stimulus legislation doesnât suspend negative credit reporting
ultimate guide to coronavirus limited-time promotions for more offers designed to help cardholders maximize rewards amid the coronavirus pandemic.