The Quickest Way to Boost Your Credit Score (Pssssttt...All You Need is a Credit Builder App)
If you could go back in time, when would you travel back to and what would you do?
I’d go back to my student days. I’d party less, I’d work harder and I’d keep up with my car loan repayments.
Yep, I’m one of the many that took out a car loan when I couldn’t afford it. And, because I didn’t make each monthly payment, my credit score got so bad that for years afterwards, I couldn’t get a car, I couldn’t get a house and I couldn’t get a credit card or loan with favourable terms. Like over 16% of the US population.
Picture this: I was in my early thirties, I had a respectable, full-time job and I was earning good money. But I still had to go to my parents for help when I wanted to buy a car because, thanks to my poor credit score, I couldn’t get a car loan. Beyond embarrassing.
However, I’m here to tell you that all is not lost. Not since I’ve discovered the credit builder app. My credit score went from 620 to 730 in a matter of months, and that’s all thanks to my credit builder app.
So, if you’re like I was and stuck outside the good credit score circle, you need to read this Grow Credit post and find out:
Why you need a high credit score
What a credit builder app is and how it works
2 things to consider when choosing your credit builder app
Ready to grow your credit?
Why you need a good credit score
Having a high credit score will enable you to borrow money to finance major purchases such as a car or a house. It can also unlock loans and credit cards that have low-interest rates and fees and will offer you the best rewards such as cashback offers, travel points, and other incentives.
“Borrowers with the highest credit scores are generally able to secure the lowest interest rates available at a given time for a mortgage or auto loan.” - Experian, Why Would You Want a Good Credit Score
For example, if you had a 30-year fixed mortgage of $250,000 with a 5.5% interest rate, you’d have to pay $511,010 in interest over the lifetime of that loan.
But, if you have a high credit score, you could secure a lower interest rate on that loan. If your interest rate on that mortgage was just 1% lower at 4.5%, you would only pay $456,017 over the life of that loan. That’s a difference of $54,993: Imagine what you could do with $50k!
Employers sometimes look at credit scores to help them make decisions about who to hire or promote, particularly if the role comes with some financial responsibilities. Rental companies might also look at your credit score to make sure you’re financially trustworthy before deciding whether to let you rent their property or not. And, utility companies could also check your credit score and even make you pay a security deposit to initiate their utility services if you have a poor one.
“Nearly every facet of your financial life is impacted by the strength of your credit score, from loan and mortgage applications, and even something as essential as a lease on a new apartment.” - CNBC, Advantages of a Good Credit Score
So, as we can see, having a good credit score affects pretty much every part of your life. But, what exactly is a credit score, and what counts as a good one?
What is a credit score?
Put simply, a credit score is a three-digit number that ranges from 300 to 850 that sums up your credit history and proves how trustworthy you are with money. The higher the number the better your credit score. It’s calculated by looking at things like the number of accounts you have, the amount of debt you owe, and your repayment history.
Read this for more information about what credit is and why it’s important.
Basically, banks, lenders and credit card companies will look at your credit score to determine how risky you are and how likely you’ll be able to pay back the money you’ve borrowed. If you have a low credit score you’ll be deemed a high-risk customer, so they’ll either reject your application or charge you a higher rate of interest to protect their investment.
What’s a good credit score?
There are hundreds of different credit scoring models that lenders use, but they all use similar methods and criteria to determine your credit score.
One of the most commonly used ones is the FICO® Score☉ model. This model breaks credit scores into groups to make it easy to see what’s a good score and what’s a bad one:
Exceptional: 800+
Very Good: 740 to 799
Good: 670 to 739
Poor: 579 or less
Generally speaking, if you have a credit score of 700 or above, then you’re in the clear: You have a good credit score. But anything less than 600 is usually considered bad. For instance, the minimum credit score you need to have to qualify to rent an apartment is 620.
Now we know what a credit score is, why we need a good one and what counts as a good one, all we need to know now is how do we get one?
How to get a good credit score
Yeah, yeah, yeah, I know. To get a good credit score, you need to pay your bills on time, reduce debt and maintain a low debt-to-credit ratio.
But what if it’s too late and, like me, you’ve already messed up? What if you’re already in debt or you’ve missed some monthly repayments and as a result, you have a bad credit score? What then?
I was told that if I wanted to increase my credit score, I should apply for a credit card or take out a loan to prove that I was capable of paying it back.
That’s all well and good, but do you know how many providers would offer me a loan that didn’t have astronomical interest rates? Zero.
So, what’s the answer? The credit builder app.
What a credit builder app is & how it works
A credit builder app can do many different things to help you with your credit score. It depends on what you need.
You can get a credit builder app that will track your credit score, update the major credit bureaus and alert you if you do something that’s negatively affected your score. Or, you can get a credit builder app that can directly help you to improve your credit score.
Here’s an overview of the two different types of credit building apps:
A credit builder app that keeps track of your credit score
A credit builder app such as Experian Boost or Credit Karma gives you an in-depth look at your credit situation. These types of credit builder apps record, store and track your credit scores and then usually send this information to the three main credit reporting agencies, which are:
Experian
Equifax
TransUnion
If you keep up with your regular payments, this will be logged with these credit agencies and your credit score will gradually improve. Of course, if you miss any payments, then this will also be logged and your credit score will suffer.
Some of these types of credit builder apps will also provide you with recommendations on what actions you can take or products or services that you can use to help you increase your score quicker.
A credit builder app that helps you improve your credit score
The other type of credit builder app will directly help you build up your credit score. The idea behind these types of credit building apps is that you can build yourself a good credit history, quickly, without having to pay the extortionate interest rates that you get when taking out a credit card or loan.
This type of credit builder app will allow you to make regular payments through the app, and these regular payments are then reported to the three main credit bureaus. This type of credit builder app is ideal for someone who has no credit history or is looking to grow it, as quickly as possible.
“They essentially give such borrowers the chance to demonstrate that they are capable of borrowing responsibly and paying off their debts on time.” - Saga, 4 Things You Need to Know About Credit Building Cards
Tracking your credit score with a credit builder app like Experian Boost™ or Credit Karma is useful for keeping you on the straight and narrow with your finances, especially if you already have a good credit score.
But, If you’re reading this, I’m guessing you’re more interested in a credit builder app that will actively help you grow your credit score. Am I right?
Keep reading if so.
2 things to consider when choosing a credit builder app
There are lots of different types of credit builder apps to choose from that will directly help you boost your credit score. They all work differently but they all offer similar benefits.
So how do you choose which credit builder app is right for you?
There are two things to consider before you make a decision:
Do you want to take out a small loan to boost your credit score?
Do you want to pay off your monthly subscriptions while also boosting your credit score?
Let’s look at each consideration in more detail to determine which credit builder app might be the one for you.
Credit builder app consideration #1: Do you want to take out a small loan to boost your credit score?
Don’t be scared by the term loan. A credit builder app such as Self will offer you a small, credit builder loan (usually between $300 and $1,000). But instead of giving you the money you’ve loaned, they’ll put it into a certificate of deposit (CD). You can then make monthly payments (the minimum amount you’ll need to pay is $25 per month) until you’ve paid the loan back. These regular loan repayments will be logged with the three major credit agencies and your credit score will start to improve, usually within three to six months.
Once you’ve paid the loan off in full, the money will then be released to you and it’s yours to do whatever you like with. So it’s a way of saving money as well as improving your credit score.
The downside to a credit builder app such as Self is that you will lose money. Self, like any lender, will still charge you interest for your loan, but it will be at a lower APR - usually between 6% and 16%.
Credit builder app consideration #2: Do you want to pay off monthly subscriptions while also boosting your credit score?
With the credit builder app Grow Credit, you’re able to pay for your current monthly subscriptions directly through the app. The app then sends the evidence of your regular subscription payments to the three credit bureaus and your credit score will start to grow within two to three months.
All you need to do is apply for the Grow Credit interest-free Mastercard, which is specifically for people with low credit scores (so you will be accepted). Then, once you get it, connect this card to your bank account. Choose which existing (or new) subscriptions you want to pay for out of a list of over 100. Add your Grow Credit Mastercard number to these subscriptions and then you’ll be paying for them with your new Grow Credit card. Your regular payments will be reported to Experian, Equifax and TransUnion each month and your credit score will start to grow.
“My FICO score has jumped 20 points in a few months of using Grow Credit, so I'm on an upward trend of credit growth and repair. Easy to set up with my current subscriptions as the virtual credit card makes it seamless.” - Jamie H
Grow credit is one of the only credit builder apps that lets you manage monthly subscriptions such as Netflix, Spotify, and Hulu, and boost your credit score for free (although there is an option to pay for a plan that allows you to spend more each month).
There are no hidden fees, no interest, no APR, and you won’t be charged for closing your account. Plus, because Grow Credit doesn’t lend you any money, you won’t lose any!
Watch this to get a better idea of how Grow Credit works:
If this sounds like it’s up your street, click here to get started with your new credit builder app.
And there you have it: The quickest way to boost your credit score, using a credit builder app.