In the financial world, one of the most common pieces of advice you’ll hear is to establish and build your credit history. Credit history is a vital part of your “Character” under the 5 Cs of credit. Your credit score can impact your ability to get a job, buy a car, secure a mortgage, and much more.

  1. Get Credit for the Bills You Already Pay

There are services available that allow you to report bills you’re already paying—such as utilities or rent—on your credit report, helping to build a history of on-time payments. It’s important to note that not all credit reports will consider these payments, but sometimes just one positive report can lead to a credit-building product.

One example is Experian Boost, a service that can have your cell phone and utility bills reflected on your Experian credit report. Keep in mind that this service will not impact your TransUnion or Equifax reports, but it’s a good start to improving your credit history with Experian.

  1. Apply for a Store Credit Card

Store-specific credit cards are typically easier to qualify for, making them a great option for establishing or rebuilding credit. Most store cards can only be used at the issuing store, which can help limit spending. Additionally, these cards tend to have lower credit limits, which can be beneficial for those who are new to credit and want to avoid overspending.

While store cards are a good way to start building credit, watch out for their higher interest rates. It’s best to pay off your balance in full each month to avoid interest charges.

  1. Apply for a Credit-Builder Loan

If you’re looking for a structured way to build or improve your credit, Penn East Federal Credit Union offers a Credit Builder Loan designed specifically for members who want to establish a positive credit history.

Here’s how it works: Instead of receiving the loan funds upfront, the money is placed in a secured savings account while you make manageable monthly payments. As you make these payments, they are reported to the credit bureaus, helping you build your credit score. Once the loan is fully paid off, the funds in the savings account are released to you. This is a safe and effective way to establish or improve your credit while saving money!

  1. Practice Good Credit Habits

Practicing good credit habits is essential for building and maintaining a strong credit history. Let’s break it down:

  • On-time payments: This is one of the most important factors in your credit score. Always make payments on time, whether it’s a loan, credit card, or utility bill.
  • Credit utilization: This refers to the percentage of your available credit that you use. It’s recommended to keep your credit utilization below 30%. For example, if your total credit limit is $10,000, try not to use more than $3,000 unless absolutely necessary.
  • Credit age: The length of your credit history also matters. The longer you keep accounts open, the better it reflects on your credit report. Closing accounts can reduce your average credit age and may impact your credit utilization ratio, so it’s often best to leave them open, even if unused.

Building a solid credit history takes time, but it’s worth the effort. Start small, be patient, and make responsible financial decisions. The economy changes, and mistakes happen, but as long as you stay informed and practice good credit habits, you’ll be on your way to a positive credit report and greater financial opportunities.

Penn East Federal Credit Union is here to support you in your credit-building journey with products like our Credit Builder Loan, helping you achieve your financial goals.

About Penn East Federal Credit Union

“Have a positive impact on our members, our community, and each other.” That is the common thread that goes across all of Penn East Federal Credit Union’s endeavors. With over eighty-five years in business and 24,000 members, the community-oriented credit union is a vital part of Northeastern Pennsylvania. Penn East FCU serves Luzerne, Lackawanna, Wayne and Wyoming counties with five branches and a 24/7 digital banking service through their website www.penneastfcu.org and their Penn East Mobile Banking App. Penn East FCU provides trusted financial solutions, integrity, and reliability to its members and community.