 TITLE: Credit-Builder Loans vs. Secured Credit Cards: Which Is Best? CONTENT: How to Build and Establish Credit\n---------------------------------\nCredit-builder loans and secured credit cards are just two ways to build and establish credit. There are other strategies you can use to boost and maintain your credit score. But first, you should understand what affects your credit score. Your FICO® credit score, the one most commonly used by lenders, is made up of five factors:\n*   **Payment history (35% of your score)**: Your payment history is the most important factor in your credit score. Lenders want to know their borrowers will be reliable in paying back their debts, and a long history of on-time payments lets them know that.\n*   **Credit utilization (30% of your score)**: This measures the balances on your revolving debt accounts (credit cards or lines of credit) compared with your borrowing limits. Creditors like to see this number at 30% or lower, but the lower, the better for your scores.\n*   **Length of credit history (15% of your score)**: The length of time you've been managing credit accounts also plays a role in your scores. This factor includes the age of your newest and oldest accounts and the average age for all of them. A lengthy credit history is good for your credit health.\n*   **Credit mix (10% of your score)**: Creditors like to see a mix of revolving (credit cards) and installment accounts (car loans, student loans, mortgages). A blended portfolio of credit accounts may help boost your score.\n*   **New credit (10% of your score)**: This includes the number of recently opened accounts and hard inquiries generated each time you apply for credit. Many recent hard inquiries and new accounts can affect your credit approval.\nOnce you understand what affects credit, the next step is to build good credit habits to improve and maintain your score. Make it a habit to pay your bills on time, keep your credit utilization low and only apply for new credit as needed. You should also monitor your credit often to keep tabs on your credit health. Doing so allows you to fix any issues right away that may come up.\nIt's equally important to avoid credit mistakes to preserve your score and overall credit health. If possible, refrain from making late payments and try to pay more than the minimum on your credit cards each month. Also, avoid installment loans with extended terms as they generally mean you'll pay more in interest over the life of the loan.\nHere are additional tips to help lift your credit profile:\n*   **Become an authorized user.** You could ask a relative or friend with good credit to add you as an authorized user to one of their accounts. The positive payment history will be added to your credit report and could help strengthen your score. You are not responsible for charges made on the card and can request to be removed as an authorized user at any time.\n*   **Ask your landlord and service providers to report to the credit bureaus.** These accounts usually won't appear on your credit report unless they go to collections. However, if you pay your rent and utilities on time, your score could improve if the landlord and service providers report payment activity to the credit bureaus.\n*   **Request a higher credit limit.** The credit card issuer may agree to increase your credit limit if your account is in good standing or your balance is low. A higher credit limit will raise your overall available credit and reduce your utilization, which can help improve your score.\n*   **Look for a cosigner.** Having a trusted friend of family member add their name to your account could help you qualify for credit you otherwise wouldn't. A cosigner can also help lower your interest rate and improve your terms. Few credit card issuers allow cosigners on accounts, but this can be a simple way to qualify for a loan that's out of reach for you on your own. An account with a cosigner helps you build credit like one without, but your account management will also reflect on your cosigners credit as well. Tread carefully if you're not sure you can afford to pay back an account with a cosigner, as you risk compromising the relationship in addition to your credit. END