Build your Credit as you Save

Part of my job at Truliant is to provide financial literacy for the communities we serve, and to share the credit union benefits with people. Unfortunately, one thing I encounter quite often is people that have poor credit (and a limited knowledge of how to get credit).

At Truliant, we have two easy starting points and I’d like to share them with you.

If you happen to get a tax refund this year and need to build credit, one option would be for you to put the refund in our Share Secure account. Here’s how it works:

• It’s an account that allows you to place a deposit into a savings account where a hold is placed on it and a credit line for the same amount of money is advanced to you for use.
• As you use your credit line, you make payments on the balance like a credit card with a much lower interest rate.
• The best benefit of all is that you can build your credit score by simply making timely payments each month. 
• Once the credit line is paid, you can access your original deposit.

I recently worked with a member by the name of Tawana to help her start a Share Secure account… and she did so with only $300. At the beginning of the process her credit score was lower than 600, but after using her credit line and paying it back, her score is now just above 650. Sure her score can still improve, but she’s at least headed in the right direction.

If you don’t have a tax refund to help get you started, or funds readily available there’s one other option. We have another account called the Share Secure Credit Builder and it works in many of the same ways as the Share Secure account. Here’s how it works:

• The Credit Union will advance a $300 deposit into your savings account.
• A hold is placed on the savings account until you pay back the line of credit with interest; this is the easiest way to improve your credit rating.
• After you repay the amount advanced to you, the line will be available to you as you wish or you can leave the $300 in your savings account and continue to use the line of credit as you need it.

If you or someone you know is trying to build credit, hopefully these two options will help get you started.

About the Author: Marjorie Rorie is the director of community services for Truliant and is responsible for developing cost-effective strategies and initiatives for serving “underserved” households, people of modest means and multicultural populations.