A Summary of Building Positive Credit
Increasing your credit score will require that you build positive credit. By doing this, you will become eligible for low interest credit products.
It is a common misperception that if you charge massive amounts on your credit cards and then pay them off each month, you will be building positive credit. In addition to not being necessarily true, this, in actuality, can hurt your credit standing. The reason for this is that credit providers want to know how much credit you have available to you and, of that amount, how much credit you have used. So, let’s say that you have applied for credit and, during the approval process, your credit provider sits down to view your credit report. He finds that your credit report shows that almost all of the credit limit on your credit cards has been used, because you have not yet paid that month’s bills. This will give a skewed picture of your finances and make you look like a bad credit risk.
Also, you don’t want to give the impression that you are spending over and beyond your means. Even though this may not be the reality of your situation, it may still appear that way. You may want to rethink the “charge everything and pay it all off at the end of the month” strategy.
Adversely, it is not always wise to have massive amounts of available credit either. The best strategy might be to use 10% to 20% of your available credit. This will show credit providers that you can refrain from running your credit cards up and can budget your money to get your bills paid.
It is best to have at least one credit card. If you have poor credit, there are credit cards which even you can qualify for. Be sure to follow the 10% to 20% estimate above and you should not accumulate large amounts of monthly interest. In addition, you should make sure that the cards you have or that you apply for report monthly to the three major credit reporting bureaus.
Pay at least the minimum amount due each and every month and be diligent in never being late. If you follow these two rules, your credit score should begin to increase.
Small low-interest personal loans can also be used to build positive credit. Follow the same strategy of paying at least the minimum amount due each month and paying on time. In short, you can use any credit product to build positive credit as long as you use it responsibly and wisely.
How I Stopped NCO Financial, Fixed my Bad Credit, and Raised my Credit Score 163 Points in Less than 14 Days. www.myncodebt.com
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