Your credit
score can affect many aspects of your life—from getting a loan to getting a
job or getting a house. Good credit is necessary for sound finances and many
major purchases. But there are no quick fixes or shortcuts to building good
credit. You must start by establishing credit, then embrace responsible credit
habits over time. This helps you create a record that shows lenders you’re a
low risk and a desirable customer.
The following tips for building your credit help you understand and improve on the key factors that the three major credit bureaus use to calculate your credit score. By following these smart financial guidelines, you can demonstrate your credit worthiness. That makes you a more desirable customer and borrower for many businesses and lenders.
1. Review Your Credit Report
In order to build your credit, you have to understand it. Start by regularly reviewing your credit reports. You can request your free annual credit report from each of the three credit bureaus and assess your credit as it stands right now. Review the following:
Payment history
Amount of credit you’re using
Credit age
Mix of credit account types
Credit inquiries
Our free Credit Report Card can help you understand what is in your credit report and how those things affect your credit score. Our report card will help you identify areas that need improvement and help you make a plan to address these issues.
2. Dispute Errors and Inaccuracies
As you review your reports, keep an eye out for any errors. Credit report errors are not uncommon. In fact, a Fair Credit Reporting study found that one in four consumers found mistakes on their reports that can hurt their scores. You have the right to dispute those errors and fix your credit report. You can do credit repair on your own or hire a credit repair company to help you.
If you already have available credit, keep the accounts
open. Older credit accounts help assign a credit
age, which makes up 15% of your score. Closing an old account makes it look
like you didn’t start establishing credit until later, which can lower your
credit score.
And if you close a credit card, you also lose valuable
available credit for your utilization rate. It may be better to keep the card
open to support a lower debt-to-credit ratio—just don’t run up the balance.
Make small purchases two to three times per year and pay them off during the
following billing cycle.
4. Make On-Time Payments
Making on-time payments is one of the most important
things you can do to build your credit. Your payment
history accounts for 35% of your credit score. It tells lenders and
potential employers how reliable you are. Missed payments are serious signs of
trouble. Charge offs and defaulted accounts say you can’t be trusted to repay
your debts as promised.
If you are newly establishing credit, avoid late payments
and other poor payment habits. This is one of the two most impactful factors
for building good credit. If you already have a poor payment history, commit to
changing now. Over time, those old payments will have less impact. Eventually,
they’ll even fall off your report.
5. Use a Maximum of 30% of the Credit Available to You
Ironically, lenders would rather not give you credit if
it looks like you need it or you like using it too much. That may seem
counterproductive, since they make their money off loan interest and fees. But
using too much of your available credit is a warning sign.
Maxing out your cards and lines of credit may point to
problems with spending, debt and income. That worries creditors, since it means
you may stop paying your loans. That’s why your utilization rate is a vital
part of your credit score—accounting for 30% of the calculation in most scoring
models.
The most
desirable utilization rate is less than 10% of your available credit. At
most, keep it under 30%. If you make any large purchases on your revolving
credit accounts, pay them off as quickly as possible to keep your utilization
rate low.
6. Open Different Types of Credit Accounts
Having a mix of credit types is a good demonstration of
creditworthiness. This factor contributes 10% to your credit score. There are three
types of credit accounts to consider:
Revolving accounts—credit cards and lines of credit. They have a credit limit and require regular payments.
Installment accounts—student loans, car loans, mortgages and personal loans. The lender provides a lump sum, and you make payments until the debt is paid off.
Open credit—charge cards, utilities and cellphone services. With charge cards, you have a credit limit, and you can make purchases and cash advances, but you don’t carry a balance. With open credit accounts, you need to pay off your charges each month.
To build credit, work toward maintaining an account
from each of these categories—as long as you can afford them.
7. Open a Secured Line of Credit
It may be difficult to build credit if you haven’t
established a credit history yet. If you have poor or fair credit, it may also
be hard to get approval for traditional credit cards or loans. However, secured
lines of credit—like secured
credit cards and secured
personal loans—can help you get started on your path to good credit.
OpenSky® Secured Visa® Credit Card
Card Details
Intro Apr:
Ongoing Apr:
17.39% (variable)
Balance Transfer:
Annual Fee:
Credit Needed:
Fair-Poor-Bad-No Credit
Snapshot of Card Features
No credit check necessary to apply. OpenSky believes in giving an opportunity to everyone.
The refundable* deposit you provide becomes your credit line limit on your Visa card. Choose it yourself, from as low as $200.
Build credit quickly. OpenSky reports to all 3 major credit bureaus.
99% of our customers who started without a credit score earned a credit score record with the credit bureaus in as little as 6 months.
We have a Facebook community of people just like you; there is a forum for shared experiences, and insights from others on our Facebook Fan page. (Search “OpenSky Card” in Facebook.)
OpenSky provides credit tips and a dedicated credit education page on our website to support you along the way.
*View our Cardholder Agreement located at the bottom of the application page for details of the card
Card Details +
To get a secure line of credit, you will need to put up
some form of collateral—usually cash, a savings account, or other personal
property. With this credit option, you may get a decent interest rate. The
lender’s risk is lowered due to your secured asset. This means they don’t need
to charge a much higher interest rate, as is common with poor credit.
8. Limit Credit Inquiries
Be careful when applying for new credit. You don’t want
more than two hard
inquiries every six months or so. Too many requests for credit can look bad
to potential lenders. These inquiries account for 10% of your score. Only apply
for credit if it can help improve your score through one of the methods
discussed above or is necessary for making a large purchase such as a home or
car.
When you do apply, comparison shop. Carefully weigh all
the terms and the chances that you will qualify for the card or loan on offer.
Then, choose only one or two and apply. If you’re turned down, don’t try again
for at least six months.
Build Your Credit
These personal tips can help you build credit and work on improving poor or fair credit. Building good credit habits can have a bit impact on your credit score. Start by signing up for Credit.com’s free Credit Report Card to get personalized advice for your unique credit situation.
If your credit needs rehabilitation due to late payments, accounts in collections or other negative items, it might be time to rebuild. Rebuilding your credit requires an understanding of your current situation, identifying past mistakes and implementing the right strategies going forward.
Wise use of a credit card is one way to start. Surprising, right? But if you use that plastic correctly, it really can help you. Good credit card strategies include keeping a low balance, making payments on time and paying your balance in full each month. To do that, it’s best to start small and only charge things that wonât kill your credit building project before it takes off. (You can check on your progress with a free credit report snapshot on Credit.com.)
Here are a few things you can charge on your credit card to help you boost that score.
Gas
The cost of gas can add up, but if you already have room for gas in your monthly budget, you can charge your gas expenses and pay them off in full using the funds in your bank account. Some credit cards offer special cash back rates on gas purchases so you can earn a little money back in your wallet (although getting a new unsecured credit card might not be the best move for you at this stage as the inquiry will cause your score to take even more of a hit).
Groceries
Groceries are another staple you likely already have built into your budget. Instead of handing over cash or a check when you pick up the necessities for the week, charge your groceries to your credit card and pay those purchases off in full each month. There are several credit cards on the market that offer special cash-back rates on groceries, as well.
Streaming Services
Monthly streaming services usually cost less than $20 a month. You could conceivably set up your credit card to pay for a streaming service, pay it off in full each month and never use it for anything else.
Balance Transfers
If you have a large balance on a high-interest credit card, it could be damaging your credit score and affecting your ability to make your payment. If you have a lower interest credit card, you can transfer the balance and reduce the interest. If you can qualify, a card with a long 0% intro APR period can help you pay your balance off interest-free.
(Cheap) Dining &Â Recreation
It’s probably not a good idea to use your credit cards at the club or restaurants, as itâs easy for costs to spiral out of control. But if youâre on a date at the movies or taking the kids out for mini golf and milkshakes, low-cost dining and recreation purchases might be a safe bet.
Small Everyday Expenses
Sometimes you have to run into a local store for a roll of duct tape or some socks. Small everyday purchases can be fairly easy to pay off in full.
Using Your Credit Card Wisely to Build Credit
For the most part, small purchases you can afford to pay off each time the statement arrives are the best things to put on your credit card, as payment history is the biggest influencer of your credit scores. Plus, carrying a balance means you’ll be hit with interest and it will take you longer to pay down your balance.
But even relatively small purchases can threaten your credit if they pile up too quickly. (Credit experts recommend keeping your credit utilization ratio â that is, your amount of debt in relation to your credit limit â at 30%, ideally 10%.) So, a good practice is to treat your credit card like cash and only purchase things you can cover with available funds.
Have any questions about improving your credit? Ask us in the comments below and one of our credit experts will do their best to help.
Image:Â bowdenimages
The post The Best Things to Charge on Your Credit Card When Youâre Rebuilding Credit appeared first on Credit.com.
Maintaining a healthy credit score requires a good bit of focus, determination and hard work. Thereâs a lot to keep up with: We need to pay our bills on time, reduce debt and maintain a low debt-to-credit ratio, among other requirementsâall to ensure a top-notch credit score. We can use all the help we can get! To that end, here are eight credit monitoring apps that can help keep your credit building on track.
1. Credit.com
One of the only truly free credit monitoring appsâmost others require you to have a paid subscription to their digital service in order to use the âfreeâ appâthe Credit.com mobile app allows you to access your entire credit profile, including your credit score and insight into how it compares to your peers. Youâll see where you currently stand, see how your score has changedâand whyâand get credit information and money-saving tips tailored to your score.
Availability: Apple and Android
Cost: Free
2. myFICO
The myFICO app is free, but it requires an active myFICO account, which means it effectively costs $20 per month or more, depending on which features you want. With this app, though, you can view and monitor your FICO scoresâthe most widely used credit scoreâand credit reports. They also provide a FICO Score Simulator, which shows you how your score may be affected if you take certain actions.
Availability: Apple and Android
Cost: Free, but requires an active myFICO account
3. Lock & Alert from Equifax
Lock & Alert from Equifax lets you lock and unlock your Equifax credit report to protect against identity theft and fraud. Youâll get an alert any time your account is locked or unlocked so you know youâre the one in control. A credit lock is not as secure as a credit freeze, but it does offer some level of protection and is generally easier to turn on and off. This app works only for your Equifax credit report, so if you want to lock all three reports, youâll have to work with TransUnion and Experian separately.
Availability: Apple and Android
Cost: Free
4. Experian
The Experian mobile credit monitoring app lets you track your Experian credit report and FICO score, with an automatically updated credit report every 30 days. The app also comes with Experian Boost, which can help you boost your score. The app alerts you when changes to your report or score occur, and offers suggested credit cards based on your FICO score.
Availability: Apple and Android
Cost: Free, but some features require a paid Experian account
5. Lexington Law
If youâve signed up for credit repair services with Lexington Law, you can use their free mobile app to keep track of your progress. In addition to providing access to your credit reports from all three credit bureaus and updates on ongoing disputes, the money manager feature, similar to Mint, helps you track your income, spending, budgets and debts.
Availability: Apple and Android
Cost: Free, but requires a paid Lexington Law account
6. TransUnion
The TransUnion mobile app allows you to refresh your credit score and credit report daily to see where you stand. It offers instant alerts if anything changes and offers Credit Lock Plus, which allows you to lock your TransUnion credit report to avoid identity theft and fraud. The Debt Analysis tool lets you calculate your debt-to-income ratio, and it allows you to view public records associated with your name.
Availability: Apple and Android
Cost: Free, but requires a paid TransUnion Credit Monitoring account
7. ScoreSense Scores To Go
ScoreSense offers credit scores and reports from all three credit bureaus and daily credit monitoring and alerts to changes on your reports. This app also provides creditor contact information so you can address errors on your report quickly and efficiently. Score tracking features let you review how your score changes over time and how it compares to your peers.
Availability: Apple and Android
Cost: Free, but requires a paid ScoreSense account
8. Self
Self helps you buildâand trackâyour credit, making it great for people just establishing their credit profile or trying to rebuild damaged credit. Self offers one- and two-year loan terms, but instead of getting the money up front, the amount is deposited into a CD. You make regular payments for the term of the loan (at least $25 per month), and then get access to the money. There is no hard inquiry to open the account, but your payments are reported to all three credit bureaus, helping build your credit. Plus, while you are repaying your loan, you will have access to free credit monitoring and you VantageScore so you can track your progress.
Availability: Apple and Android
Cost: Free, but requires a Self loan repayment of at least $25 per month
Credit Monitoring Apps to Fit Your Needs
With so many different options, youâre sure to find a credit monitoring app that meets your needs. And donât forget: you can always check your score for free using Credit.comâs free Credit Report Card.
The post Boost Your Credit Score: 8 Helpful Credit Monitoring Apps appeared first on Credit.com.
Article originally published September 1st, 2016. Updated October 29th, 2018.Â
Itâs a common question around these parts: how do I fix my credit? And, while credit scores do have a lot of nuances, the answer is actually pretty straightforward: pay all your bills by their due dates, keep your debt levels low, add a mix of accounts as you can afford it and voila! â your credit score should rise steadily over time.
Still, for people plagued with bad credit or someone looking to get the absolute best rates on a new loan, waiting it out can seem like an unattractive option â and so the question gets a little more pointed: how do I fix my credit fast?
Truth be told, there are no guarantees when it comes to getting a quick credit boost. Exact point increases will vary depending on your full credit profile and, even if youâre teetering toward top-tier credit, your scoreâs beholden to a lenderâs schedule when it comes to reporting new information to the major credit bureaus.
Most creditors provide updates to the big three bureaus every month â meaning, yes, you can boost your credit in 30 days, but any shorter timeframe is admittedly a long shot.
Still, there are few steps you can take to try to raise your credit score in the short-term. Hereâs a breakdown of ten of your best options.
1. Pay Down Your Credit Card Balances
Credit utilization ratioâ how much debt youâre carrying vs. your total available credit â is a huge part of credit scores, second only to payment history. But while you canât just erase a missed payment from your credit file (most negative information takes seven years to age off of your credit reports), you can pretty readily boost your utilization rate by wiping out big credit card debts.
Experts generally recommend keeping the amount of debt you owe collectively and on individual cards below at least 30% and ideally 10% of your credit limit(s).
So, if youâre close to maxing out one card and/or youâre carrying big balances on all of them, paying those debts down can result in a fast boost. Just be sure to pay charges off by your statementâs billing date as opposed to their actual due date because thatâs when most creditors will update account information with the credit bureaus.
And, of course, refrain from making any new purchases once the debtâs been eradicated.
2. Ask for a Credit Limit Increase
Essentially, a different solution to the same problem â you may be able to improve your utilization rate by getting an issuer to give you a higher limit on one of your existing cards. Just be sure not to use up that extra credit. Otherwise, this move can have the opposite effect.
And be prepared to see an initial ding to your score â creditors sometimes pull your credit when you ask for a limit increase, and that could generate a hard inquiry on your credit reports and cost you a few points.
You might easily make up those points and then some, however, if the credit limit increase is large enough.
3. Get an Error Removed
Errors on credit reports are more common than you may think, so itâs important not to simply take a bad score at face value â particularly because getting an error removed can be one of the faster ways to fix your credit.
The Fair Credit Reporting Act requires that the bureaus investigate and remove items deemed to be errors within 30 days of a dispute being filed.
Thatâs why itâs a good idea to pull your credit reports â you can do so for free each year at AnnualCreditReport.com â and routinely review them for any inaccuracies that may be unduly weighing your credit down.
4. Clean up and Polish Your Credit Report
Once you receive a copy of your credit reports from the three major credit bureaus- Experian, Equifax, and Transunion, you can take a closer look at each item that is on there.
You have already read about getting an error removed, and this is a good step to take, but donât stop there. Look for accounts you have on your credit profile that show late or missing payments and verify the accuracy of each item. If you see something that is wrong, send your dispute so that the problem can be investigated.
5. Attempt to Pay Twice Monthly
Yes, you may be paying your balances each month, and you are paying them on time, but you need to keep in mind that your creditors are reporting your balances to the credit bureaus only once per month.
If you have a credit card, for example, that you are constantly maxing out and reaching your limit on throughout the month, the statement you receive will show the balance. You make the payment, but since it was reported only once that month, it is basically showing that you are using 100% of the available balance on that credit card.
If you send in payments twice a month, however, you are essentially breaking up your payments, and you are effectively keeping your overall credit card balances much lower than if you continue to only pay once per month.
Call: 1.844.346.3296or learn more
// <![CDATA[ $('aside:contains(Lexington Law Credit Repair:)').css({'padding':'0px','color':'#f7f7f7'}); $('strong:contains(Lexington Law Credit Repair)').css('display','none'); // ]]>
6. Open a New Credit Account
If you want a nice boost to your credit and you want to help improve your credit utilization ratio, you can consider opening a new credit account. This is especially helpful if you find that your current credit utilization ratio is much too high.
Opening the new account adds to the available credit you have and will show that with the new balance, you are using less. However, this is not a good option if you are already juggling multiple accounts. You may end up hurting your credit instead of helping it if you try to stretch your credit too thin.
7. Open up Negotiations
Have you taken a closer look at the current debt you owe? Have you considered negotiating the debt you have in collections to rebuild your credit? Many collection agencies will be willing to negotiate because they really wonât be losing any money on the debt if you are able to settle for less because they most likely bought the debt account for a minimal price.
It never hurts to open a negotiation to try and settle the debt you have for a smaller and more manageable amount on your credit accounts. If you find that you are unsure about this process, or if you donât know if it is something you should do, you can always seek the help of a credit counselor to help educate you on the process and offer suggestions as to what you can do otherwise.
8. Become an Authorized User
Another fast way to boost your credit could be to become an authorized user on someone elseâs credit account. For this to be a viable and recommended option, you will need to find someone you trust, such as a close friend or relative, that is financially responsible and is willing to do this for you to help improve your credit rating.
As an authorized user on someone elseâs account, their account will still show up on your credit report, and their payment history, credit utilization ratio, and credit card balances will become part of your credit history and may award you with a good credit score. Â Not all credit card companies report authorized users however, so you will want to make sure that if you do become an authorized user, that the account information will show up on your credit reports.
9. Make On Time Monthly Payments
In addition to paying on your accounts twice a month, you should also make sure to make your payments on time every month. Your payment history makes up approximately 35% of your FICO score.
If you find it hard to remember your due dates, consider placing your accounts on auto pay with reminders so it reminds you that the payment is coming due and it will then automatically make the payment for you.
10. Mix Up Your Credit Choices
Finally, make sure you are mixing up your credit choices instead of focusing on using just your credit cards, for example. Using different types of credit can boost your score fast – even though it wouldnât be a significant boost.
If you need an appliance, instead of using your credit card, you should consider a small personal loan instead. It shows that you can effectively and responsibly utilize different types of credit.
Fastest Way to Boost Credit After a Bankruptcy
One of the biggest hits to your credit is a bankruptcy and people are often anxious and ready to begin boosting their credit following their bankruptcy. In theory, someone looking for credit after a bankruptcy may actually appear to be less of a risk because they are not able to qualify for Chapter 7 for another eight years.
Following your bankruptcy, it is recommended that you make all your payments on time, learn how to manage your money efficiently, and find ways to reestablish your credit without trying to borrow money too soon and this could prove to be the fastest way to build credit.
You should also keep a very close eye on your credit reports and credit scores from the major credit bureaus and look for any errors or inaccuracies including any mistakes with your address, employment, or personal contact information.
The best way to start improving credit following a bankruptcy is to open a secured credit card account and make your first deposit into the account.
Conclusion
Although these ten strategies are a good start to finding the fastest way to boost your credit, you need to remember that it still may take several months for the credit reporting agencies to report the improvements on your credit report.
While they may be âfastâ methods, they are certainly not miracle credit cures, so you need to have a fair amount of patience when it comes to seeing the positive effects on your credit report.
Be sure to dispute any errors you find with the credit bureau in question (you go here to learn how). You can also view two of your credit scores for free each month on Credit.com as you monitor your progress toward building better credit.
The post What’s the Fastest Way to Boost My Credit? appeared first on Credit.com.
Call: 1.844.346.3296or learn more