Repair Your Credit by Adding Positive Credit
Adding positive credit to your credit history is an integral part to rebuilding your credit and increasing your credit score. Adding positive credit will help to balance out some of the negative information. Paying off old debt is of course a great way to increase your score, but, you also need to remember to not increase the balances on other accounts. Also, you need to establish new credit so as the old negative accounts start to slowly move away, they will be replaced with current and positive accounts.
What affects my credit score the most?
Your payment history is the most important aspect of your credit score, because it shows how you’ve managed your finances, including any late payments. Your credit history is also very important, as it demonstrates how long you've been managing your accounts, when your last payments were made, and any recent charges.
What is my credit mix?
Your credit mix refers to the different types of credit you have, such as credit cards and mortgages. In addition to your credit mix, the number of accounts you have will also influence your score.
Apply for a Secured Credit Card
If you are unable to get approved for an unsecured credit card, other option is to option secured credit card. With this type of card, you will be making an initial deposit into an account to secure the credit line on the card. You can get this card even if you still have some bad credit in your credit report. For example, let assume that you apply for Bank of America secured credit card with a limit of $300.00, you will put $300.00 as a security to your credit card and bank will provide you $300.00 credit limit. In case you will not pay back your obligation, bank will take away your security deposit. Even though you are securing your credit with a deposit, payments must be made on time and the account balance should be kept low. Make sure this credit card company reports to all three credit bureaus as this will help increase your credit score.
Get an Installment Loan
You need a mix of different types of credit types, which include revolving credit (credit cards) and installment accounts. A credit union is a great place to apply for a small installment type loan
Obtain a Retail Credit Card
Many stores extend credit without tremendous regard for the credit standing of the applicant. Such as store are Lowes, Home Depot, Walmart.
Keep Account Balances Low
Keep those balances low - and by low we mean do not charge more than 30 percent of your available credit limit. If at all possible, aim for 5 percent of your available credit limit and your credit scores will get better and better as long as you pay all of your credit obligations on time. Consumers who max out or charge close to their credit limit are more likely to experience problems repaying the debt should a change of circumstance occur, such as loss of income or illness. The lower the utilization rate, the better your credit score.
Maintaining Healthy Credit
A credit reporting agency needs a track record of how you’ve managed credit before it can calculate a credit score. Typically, six months' worth of activity will provide enough information to generate a score. As your credit history increases, your score might rise or fall based on how you pay your bills over time.
Check your credit score regularly with a monitoring service, but don’t let minor fluctuations stress you out. Your credit score is just a snapshot of how you’re managing your credit at a particular moment in time. Paying your bills on time, maintaining low balances and not taking on too much debt can help to rehabilitate your credit profile, resulting in a higher score.