Do you have bad credit or no credit? How do you go about building positive credit so that you can increase your credit scores?
There are many ways, but they all come down to one thing: adding the right accounts to your credit portfolio.
Building positive credit is one of several essential tools for improving your credit scores.
How Good Credit Gets Built
Your credit reports are made out of data provided to the credit bureaus by furnishers like credit card issuers and lenders. You can’t simply tell the credit bureaus to add accounts to your credit reports, but you can achieve the same thing by applying for new credit or loans.
What makes an account positive? More than anything else: a history of payments made on time.
That’s what every lender and creditor are ultimately looking for. It tells them you have a history of responsibility with money. Their money.
There is, of course, more to it than that. There are multiple factors that credit scoring companies like FICO take into account when coming up with your credit scores.
The other most important one to consider here is…
Use Your Credit Wisely
Letting your credit cards sit around unused won’t allow them to help you build positive credit — it’s the next worst thing to not having any credit.
On the other hand, maxing out your card turns what would be helpful, positive credit into a negative factor of your credit scores.
The key is using only as much of your credit as you know you can pay off every month.
What’s more, if you carry any balance over from one month to next, make sure to keep it between 1 and 30 percent of your available credit (that is, your credit limit).
For instance, if your credit limit is $1,000, make certain you pay down your balance to less than $300 every month. Even better, keep it between $10 and $100 (1-10%).
Repair Your Negative Credit
While you go about building positive credit, don’t forget that any negative credit items on your credit reports are highly likely to be holding down your credit scores.
We strongly recommend reviewing each of your negative accounts for any details or information that might be out-of-date, incorrect, or incomplete.
Not sure how to go about that? Our credit experts are here to help! We can also give you credit-building advice and tools fit to your situation. Call or message us today to learn more.