How to build and rebuild your credit score
Birmingham, Ala. —
Marissa Mena says she checks her credit score twice a month. "I check it all the time to make sure my credit is staying where it needs to be." Just a few years removed from college, Mena recently bought a new car. She says the fact that she started building credit while still in college helped her make that purchase. "When they did go and check it (credit score) they came back and they were smiling so that was good."
Mena got a credit card in college to purposely start building credit. " You grow up and you get older and you have to get your own apartment or your own house and so you have to have a good credit score to get those things."
The Director of the UAB Regions Institute for Financial Education, Stephanie Yates, says what Mena did is a smart way for a young person to start building credit. "Ppening a credit card account but a small credit line until you're sure you can handle that responsibility." But Yates says it's not enough to open the credit card account, you have to use it and pay it off each month.
Another option for a young person to start building credit is to take out a small personal loan. Yates says, "ideally you don't even use the money. Put it in a savings account use that money to make the payment each month." Yates says that will show positive payment history.
And what if you're not a young person but you need to rebuild your credit after a problem? Yates says, " I would absolutely advise against a credit repair company because a lot of them are fraudulent and often times they're going to offer you services you can do yourself." Instead Yates suggests getting a secured credit card because that uses a savings account as collateral.