Credit Score Below 600? 3 Steps To Take This Week
Follow these simple credit score tips so you can live your best life
You shop around for the best prices. You drive past three gas stations to get to the pump that’s 5 cents cheaper. You use a rolling pin to extract the last toothpaste from the tube.
You’re a saver, and you’re pretty darn good at it. But there’s one three-digit number that keeps costing you money – your credit score. You know you should be doing more to improve your score, but perhaps you’re unsure where to start.
Here’s the good news: With more tools than ever before to build up your score, now is the perfect time to do it. Here are three quick and easy steps you can take right now to help raise your score:
Take Control of Your Debt
Debt isn't necessarily a bad thing when it comes to your credit score. In fact, your credit score gauges how likely you are to pay back a loan on time. So you need some debt to build your score.
But ... too much debt can quickly send your score spiraling in the wrong direction. Late payments and a high debt-to-credit ratio indicate to lenders that you may be a risky borrower.
The point? If you're drowning in debt, you're likely going to need to tackle that debt before you can start building your credit score back up.
Where to start? First, assess your situation. If you can craft a plan to pay off your debt on your own, do it.
If you think you need help, try reaching out to a debt relief specialist. A company like National Debt Relief may be able to help you reduce and pay off your debt. You can schedule a free, no-obligation consultation where a specialist will give you a savings estimate and show you a custom plan to get out from under debt.
Debt settlements usually have an initial negative impact on your credit score, but it can relieve you from your debt and get you on the path to building your score and restoring your finances.
Accumulate Credit History With a Secured Credit Card
You're pulling in a paycheck. You're spending responsibly. Now it's time to build up that credit score. Where do you start?
Step 1: Get a secured credit card.
A secured credit card is a bit like a hybrid between a debit card and a credit card. You move money into your secured credit card's account, and that amount is what you can spend on your card. As your card automatically gets paid off each month, it gets reported as on-time payments to the credit bureaus - helping you build your credit history.1
One popular, fee-free option is the Secured Chime Credit Builder Visa® Credit Card2.
The beauty of this card is its simplicity. All you need to do is apply and set up a qualifying direct deposit of $200. A Chime® Checking Account is required. Then you're all set. It only takes minutes, and you can do it all online.
There's no annual fee or interest3, and no credit check is needed to apply, so you won't ding your score when you sign up.
Build Payment History With Your Subscription Payments
Don't have the funds to pay upfront for a secured credit card? There's another solution that can produce similar results. It's called Grow Credit.
For those that qualify for the Build Free plan, Grow Credit is a free, simple way to build a credit history without getting a high-interest loan, depositing any money, or changing your spending habits.
It works this way: You set up a Grow Credit account and receive an interest-free Mastercard, which you can only use to pay your ongoing subscriptions, such as Netflix or Spotify. Grow Credit reports your consistent monthly payments to the major credit bureaus, giving you a solid payment history to establish or boost your score.
Grow Credit also offers a paid version of their services which allows you a higher monthly spending limit to build your credit faster. But their free version is 100% free and, if your subscription payments total $17 or less each month, there's no need for the higher spending limit.
There's no hard credit check to apply.
Building your credit is essential to your financial health. There are many approaches you can take, including a secured credit card, a credit-builder loan, reporting your monthly household bills, or even a combination of these methods. What you choose (and what will work best) depends on your unique financial situation.
GOBankingRates maintains editorial independence. While we may receive compensation from actions taken after clicking on links within our content, no content has been supplied by any advertiser prior to publication.
Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Credit Builder Visa® Card is issued by Stride Bank, N.A., Member FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted.
1 The Chime Credit Builder Visa® Credit Card is issued by Stride Bank, N.A. pursuant to a license from Visa U.S.A. To apply for Credit Builder, you must have received a single qualifying direct deposit of $200 or more to your Checking Account. The qualifying direct deposit must be from your employer, payroll provider, gig economy payer, or benefits payer by Automated Clearing House (ACH) deposit OR Original Credit Transaction (OCT). Bank ACH transfers, Pay Anyone transfers, verification or trial deposits from financial institutions, peer to peer transfers from services such as PayPal, Cash App, or Venmo, mobile check deposits, cash loads or deposits, one-time direct deposits, such as tax refunds and other similar transactions, and any deposit to which Chime deems to not be a qualifying direct deposit are not qualifying direct deposits.
2 On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.
3 Out of network ATM withdrawal and over the counter advance fees may apply. See here for details
4 All Credit Builder Accounts made by Lead Bank, Member FDIC, Equal Housing Lender, Sunrise Banks, N.A. Member FDIC, Equal Housing Lender or SouthState Bank, N.A. Member FDIC, Equal Housing Lender. Subject to ID Verification. Individual borrowers must be a U.S. citizen or permanent resident and at least 18 years old. Valid bank account and Social Security Number are required. All loans are subject to consumer report review and approval. All Certificates of Deposit (CD) are deposited in Lead Bank, Member FDIC, Sunrise Banks, N.A., Member FDIC or SouthState Bank, N.A., Member FDIC.
5minus interest and fees
6Results are not guaranteed. Improvement in your credit score is dependent on your specific situation and financial behavior. Failure to make monthly minimum payments by the payment due date each month may result in delinquent payment reporting to credit bureaus which may negatively impact your credit score. This product will not remove negative credit history from your credit report.