Smart ways to establish credit in 2020

Dipping your toe into the world of credit? You are in luck: There are more ways to establish credit now.

You build your credit score by adding positive information to your credit reports compiled by the three major credit bureaus — Experian, Equifax and TransUnion. Here are three well-known ways to establish credit, plus some new products designed to give you a leg up:

Authorized user. Ask someone with good credit habits to add you as a user on their credit card. They don't have to let you use the card; just being added to the account is enough.

Pro: You can benefit from their credit history.

Con: Not all card issuers report authorized-user activity to the bureaus, so check that first.

Secured credit card. These cards are easy to qualify for because they require an upfront deposit.

Pro: Payments are usually reported to all bureaus.

Credit-builder loan. These help you improve your credit and save at the same time.

Pro: Payments are usually reported to all bureaus.

Con: You cannot access funds until you have paid back the loan.

New tools that can help:

Rent reporting: Many companies, including Rent Reporters, RentTrack, Rock the Score, and CreditMyRent, will let you or your landlord report your rent payments to the bureaus.

Cons: Not all credit-score models incorporate the data. The widely used FICO 8 scoring formula doesn't consider rent. But VantageScore, FICO's competitor, does.

◾Reporting companies charge a monthly fee of $6.95 to $9.95 and a one-time enrollment fee of $25 to $95.

◾Experian Boost: This free service lets you add on-time cellphone and utility payments to your Experian credit report.

This information, which is not typically counted toward your score, is used to calculate your FICO score and can push it up higher.

Pros: You don't need to qualify for Boost. As long as you pay utility and cellphone bills through your bank account, that information can be added to your Experian report.

◾Lenders unfamiliar with this new product may interpret your utility and cellphone information as part of your debt load, which affects your chances of qualifying for credit. Experian is "working with lenders to ensure they understand these positive payments," spokeswoman Amanda Garofalo said.

UltraFICO: This new score is not yet widely available, but FICO said it will roll out this spring. Unlike the traditional FICO score, UltraFICO takes into account how much you have in savings, how long your bank accounts have been open and how active they are.

Pros: Free. Rewards responsible spending and saving.

Cons: You have to let FICO's data partner scan your bank account transactions. You cannot see your UltraFICO score unless you have been rejected.