If you’re looking to raise your credit score, there are some innovative tools to help that you’ve probably never heard about.
Everyone knows that the most important factor in a good credit score is establishing a history of on-time payments. But if you’ve been a victim of circumstance or you’ve just made some mistakes with your credit, stating the obvious isn’t particularly helpful.
So instead, let’s look at tools to improve your credit that aren’t so obvious.
1. Build Credit By Saving
A good credit score requires a payment history showing responsible borrowing. That means timely payments when you borrow money, and it accounts for 35% of your FICO® Score.
But how do you borrow when your credit score is already in the red zone?
Self - Credit Builder Account + Secured Visa® Credit Card offers a unique solution to this problem. Instead of a traditional loan where you borrow, spend, then pay the loan back, Self allows credit-challenged borrowers to get a loan that’s set aside in a CD until after the loan is paid. You get the loan proceeds at the end. So, it’s kind of like building credit by saving.
In the meantime, Self reports your timely payments to all three credit bureaus. And that’s the focus–building credit. Not borrowing to buy.
How It Works
Using the Self - Credit Builder Account + Secured Visa® Credit Card is pretty straightforward.
- Using the Self web platform or Self app, you apply for a Credit Builder Account. You can choose a loan amount that fits your budget and repayment time that suits you.
- Once approved, the money is deposited in a locked account in one of its partner banks. You even earn a little interest.
- Make your monthly payments on time. This builds up a good credit history, which is reported to all three credit bureaus: Experian, Equifax, and TransUnion.
- Once you complete making the repayments, the CD unlocks and money in the account is released to you minus any loan interest plus fees. You can then choose to repeat the process or use your newfound credit elsewhere.
2. Pay Your Rent
If you’re a renter, your rent payment is probably your largest financial obligation. But even if you’ve always paid like clockwork, it’s not going to increase your credit score. That hardly seems fair.
But there are now a number of services that can change that.
Rent Reporters will report two years of your rental history to two of the big three credit bureaus–TransUnion and Equifax. Signing up is easy, but you will need your landlord’s cooperation.
Rent Reporters charges a sign-up fee of $94.95 and a $9.95 fee for ongoing monthly reporting. It touts an average credit score increase of 40 points for its customers.
Among rent reporting services, Rent Reporters offers one unique value proposition–a money-back guarantee if you’re not happy with your score increase after Rent Reporters first reports your rent history.
ExtraCredit offers rent reporting to the credit bureaus as part of a credit-related bundle of services, including credit monitoring and other tools. There’s no sign-up fee, but the monthly charge is pricier–$24.95 per month.
Rental Kharma’s rent reporting service is similar to Rent Reporters. It reports your past rent payments to TransUnion and Equifax and ongoing rent payments if you maintain the service. It includes only six month’s past rent reporting for its $50 sign-up fee, but you can add your entire rental history at your current apartment for an extra $60 fee. Ongoing rent reporting is $8.95 per month.
3. Secured Credit Cards
Timely payments on a credit card account may be one of the best ways to jump that credit score, but those with damaged or no credit may not be able to get most cards. That’s where secured credit cards come in.
A secured credit card is a credit card secured with a deposit equivalent to its credit limit. That deposit provides the security that can substitute for a good credit score. So, secured credit cards are available to the credit-challenged and may not even require a credit check at all.
4. Press a Button; Get a Boost
Experian Boost is the easiest and cheapest option to use among our list of little-known ways to improve your credit. Experian Boost uses your bank account history to boost your credit based on your timely payment of regular bills–like utilities, phone bill, or even Netflix.
While it is easy (and free), it may also have more modest results. Experian reports an average of a 13 point jump for Boost users, and the version of the FICO score that it impacts (the FICO Score 8–yes, there are different versions of the FICO score) isn’t used by every lender.
That said, there’s little downside to try if you have regular, timely bill payments. Did I mention it’s free?
Consider These Alternatives but Don’t Ignore the Basics
Each of these four approaches to improving your score has its place, particularly when you’re working towards short-term improvements to rough credit.
But don’t ignore the basics. If you have existing loans with delinquencies, focus on fixing those first. If you have existing credit cards or other revolving credit, pay them down.
Consider one of the alternative options as a next step.