Your credit report reflects the ability to manage debt and handle credit responsibly.
If only negative credit exists on your credit report, the credit scoring model will calculate your credit score low because it appears as though you are a high risk for default.
While you may have been a high risk based upon past mistakes it does not mean you are currently a high risk.
One of the best ways to change your credit score is to add good credit to credit reports in addition to paying all obligations on time. You can add good credit to your credit reports with easy to qualify for unsecured credit cards, retail credit cards and even secured credit cards.
1. Unsecured credit cards
An unsecured credit card will help raise your credit score by reporting on-time monthly payments to your credit reports. Payment history constitutes 35% of a credit score. Making timely payments on any credit obligation will be weighted heavily in calculating a credit score.
Unsecured credit cards can be difficult to obtain if you have bad credit. The options are limited but there are a few that exist, with good interest rates. Orchard Bank® Classic MasterCards reports to 3 major credit bureaus monthly providing you the opportunity to rebuild your credit score.
The reason I like this card for consumers looking to rebuild or build credit is that Orchard pre-qualifies you for the card you will most likely be approved for before an actual hard inquiry is placed on your credit report. Most credit card companies just pull your credit when you first apply for a card and a hard inquiry is placed on your credit record whether or not you are approved.
With Orchard, you get a rare opportunity to see which card or cards you have the best chance of being approved for before a hard inquiry is placed on your credit report. The prequalification process is effortless and only takes about 60 seconds. Once you are prequalified you can then apply for the card or cards you are more likely to be approved for. Get pre-qualifed now.
2. Secured credit cards
A very simple way to add good credit to your credit report is to get a secured credit card. Most consumers can qualify for a secured credit card because collateral is required upon approval for a secured credit card. The collateral is a cash deposit usually held in a savings account, some are interest bearing and some are not. The credit card issuer will then extend credit for the amount on deposit in the account or an amount slightly higher than the balance.
Most secured cards allow a deposit from $200-$5,000. Secured credit cards are no different than unsecured credit cards. Payments are reported to the credit bureaus and must be made on time. Many secured card issuers will grant you an unsecured credit card after a series of on-time payments, usually 12 months.
3. Retail Credit
Retail credit cards act much like unsecured and secured credit cards. They report to at least one of the major credit bureaus and payments must be made on-time. Some retail cards are easier to qualify for than unsecured credit cards.
A great on-line retailer is Fingerhut. Fingerhut carries everything from electronics and computers to clothing and appliances. They have over 20,000 products across dozens of categories. In addition to carry a variety of brand name products they provide an opportunity for consumers to build their credit history. Are you pre-approved for Fingerhut Credit. Enter your name and address and find out now.
Other retail cards such as Radioshack, a gas card and even a furniture store card may help re-establish credit also.
With any new or existing credit accounts you should never have a balance higher than 30% of your available credit limit. For example, if your credit limit is $500 your balance should never exceed $150. Use the credit card regularly but make sure you stay within 30% of your available credit limit.
Your credit scores will increase over time with low credit utilization and timely payments. Even if you can only make the minimum each month, make sure it is on time and never miss the minimum payment due.
