Right on the Money: How to build or repair your credit

Jul 3, 2019, 2:46 PM | Updated: Oct 4, 2019, 10:34 am
(Stock Photo)
(Stock Photo)

This $1,000 Challenge about how to build and repair your credit is Presented by Zip Mortgage powered by Zions Bank. Visit *Loans subject to credit approval; terms and conditions apply. A division of Zions Bancorporation, N.A. Member FDIC.  Equal Housing Lender. NMLS# 467014.

SALT LAKE CITY — Financial experts say building your credit from scratch is an important part of becoming an adult — and not something you should do lightly.

KSL’s Dave and Dujanovic had a listener reach out during a show this week during their daily Right on the Money segment asking about credit.

“I’m a freshly graduated Millennial,” the listener said. “I’ve got student debt but never had a credit card. What’s the best way to start getting good credit?”

So, where do you start? Dave & Dujanovic turned to credit experts from NerdWallet and Credit Karma to find out what you need to know.

Building Credit

NerdWallet’s Erin El Issa and Bev O’Shea say in order to have a FICO score in the first place, you’ll need to have had at least one line of credit open for at least 6 months. So that means if you’re starting from scratch, it’ll take at least that long to start seeing anything actions you take show up on your reports.

Unsecured Credit Cards

One of the first options that can help in building credit, especially if you’re starting from scratch, NerdWallet says, is through a secured credit card.

A secured credit card is different than your regular unsecured credit card because it is backed by a cash deposit that you put into it up front.

It works just like a regular credit card and you’re able to use it like one to make purchases. They aren’t meant to be used forever, but El Issa and O’Shea say it’s a great option to build credit up to qualify for an unsecured card.

Credit-Builder Loan

According to NerdWallet’s team, a credit-builder loan is another great option to start building your credit and saving at the same time.

A credit-builder loan does exactly what its name implies, El Issa and O’Shea say: it builds your credit. However, credit-builder loans are different from normal loans in that you have to make all of the payments first before you get the money.

Most local credit unions or community banks offer these types of loans. In effect, El Issa and O’Shea say, the loans are like a forced savings account.

Recurring Bills

Finding a bill that you’re already paying consistently can be a great way to build credit if you transfer that payment to a credit card and pay it off entirely every month.

Experts at NerdWallet and Credit Karma suggest using services like RentTrack or PayYourRent. Services like these can help report your on-time payments to credit reporting agencies even if your landlord doesn’t.

Rebuilding Credit

There are over 35 million Americans who currently have a credit score below 550. For reference, Experian says that a score of 700 and above is generally considered good credit and 800 is ‘excellent.’

So if you’ve been dinged on your credit score for any reason, what should you do to rebuild your credit? For this, we turned to Louis DeNicola, a personal finance writer for Credit Karma.

Good habits

Building credit takes time, DeNicola said. One of the best ways to make sure that your credit score is moving in the right direction is to ensure that you’re keeping up with good financial habits and being responsible with the way you are using your credit.

Keep utilization low

DeNicola writes that you should keep credit utilization below 30% on all your credit cards. That means if your credit limit on a card is $5,000, don’t charge more than $1,500.

Pay on time

DeNicola says there’s no reason not to pay 100% of your payments on time, every time. It doesn’t just need to be your credit accounts, El Issa and O’Shea add, but your bills and other outstanding debt payments should be paid on time as well.

Multiple accounts

Applying for multiple credit accounts all at once can cause a big hit to your score. NerdWallet recommends that if you are applying for multiple lines of credit you wait at least 6 months between applications

Keep your existing accounts open

If you don’t have a really good reason to close an account, keep them open, El Issa and O’Shea say. Having older accounts and lines of credit can help with the indicators that credit companies look at.

You don’t need to carry a balance

It’s a myth that you need to carry a balance to boost your credit. According to CreditKarma, it could even hurt your score, especially if your card carries a high interest rate.

The $1,000 Challenge

Join our secret $1,000 Challenge Facebook group, where you can share your progress toward $1,000 in savings, get tips from others, and share tips of your own.

Dave & Dujanovic can be heard weekdays from 9 a.m. to noon on KSL Newsradio. Users can find the show on the KSL Newsradio website and app, as well as Apple Podcasts and Google Play.

Click here for official contest rules.

affordable care act


Today’s Top Stories

Business + Economy

Former Governor of Utah, Gary Herbert speaks at the start of demolition at the old Utah State Priso...
Aimee Cobabe

Demolition begins at the old Utah State Prison in Draper

It took years to get the Utah State Prison to this point. Now, the site will be repurposed and built into a so-called "15-minute community."
1 day ago
The American Red Cross of Utah urges Utahns to consider their organization on Giving Tuesday....
Simone Seikaly

American Red Cross urges gift of time for ‘Giving Tuesday’

Giving Tuesday emphasizes a day for charitable actions after several days (Black Friday, etc.) focused on spending and buying.
2 days ago
People wait in line to enter Macy's department store during Black Friday in New York City on Novemb...
Jordan Valinsky, CNN Business

Online Black Friday sales set a new record

Online shopping is expected to remain strong through Cyber Monday.
2 days ago
Shoppers walk through City Creek Center in Salt Lake City on Wednesday, Dec. 8, 2021. The Better Bu...
Mark Jones

Making the most of Black Friday, Better Business Bureau has tips

The Better Business Bureau offers tips to those shoppers who plan to shop in person on Black Friday.
7 days ago
sundance mountain resort will open a week early...
Kira Hoffelmeyer

Sundance Mountain Resort to open seven days early

SUNDANCE, Utah — Sundance Mountain Resort is opening one week ahead of schedule. The resort announced via email this morning that it expects to open on Dec. 3 because of all the snow it’s gotten, instead of its planned Dec. 9 opening. Sundance says it’s the earliest opening day they’ve had in a decade.  “We […]
7 days ago
Beautiful woman sitting at the table working with laptop at home around christmas tree rubbing eyes...
Sandee LaMotte, CNN

Expert tips on how to save your sleep from holiday stress and indulgence

If you suffer from anxiety, depression or seasonal affective disorder (a condition that causes sadness when there's less daylight), watching your sleep is key, experts said.
7 days ago

Sponsored Articles

Happy joyful smiling casual satisfied woman learning and communicates in sign language online using...

The best tools for Deaf and hard-of-hearing workplace success

Here are some of the best resources to make your workplace work better for Deaf and hard-of-hearing employees.
Team supporters celebrating at a tailgate party...

8 Delicious Tailgate Foods That Require Zero Prep Work

In a hurry? These 8 tailgate foods take zero prep work, so you can fuel up and get back to what matters most: getting hyped for your favorite
christmas decorations candles in glass jars with fir on a old wooden table...
Western Nut Company

12 Mason Jar Gift Ideas for the 12 Days of Christmas [with recipes!]

There are so many clever mason jar gift ideas to give something thoughtful to your neighbors or friends. Read our 12 ideas to make your own!
wide shot of Bear Lake with a person on a stand up paddle board...

Pack your bags! Extended stays at Bear Lake await you

Work from here! Read our tips to prepare for your extended stay, whether at Bear Lake or somewhere else nearby.
young boy with hearing aid...

Accommodations for students who are deaf and hard of hearing

These different types of accommodations for students who are deaf and hard of hearing can help them succeed in school.
Young woman receiving laser treatment...
Form Derm Spa

How facial plastic surgery and skincare are joining forces

Facial plastic surgery is not only about looking good but about feeling good too. The medical team at Form Spa are trained to help you reach your aesthetic outcomes through surgery and through skincare and dermatology, too.
Right on the Money: How to build or repair your credit