1000 and one way to increase your credit score

[argo]

Hi,

How do you increase your credit score especially starting from scratch, from nothing? This is especially important for people who come from other countries or after bankruptsies.

One way, that I used, is to start with checking account with a local bank, and then opened a credit account. After first two months they increased my credit limit by a third, but not enough yet.

What ways do you know?

[freeballer16]

Yea me being below 18 I wouldn't mind finding out some good ways to get and maintain good credit.

[PRICEPLUS]

Well, with my DD I put her on my credit card. My credit score becomes her credit score or at least that is what Suze Orman said!!

I started with an Amex Card and used it responsibly. I then applied to my bank where I had my checking and savings. My line of credit was small at first but they eventually increased it as I was quite responsible with my payments and spending.

I also was paying off student loans and this waqs on my credit report. I was never late with a payment!

I am sure others here have great ways to establish credit. I just gave you how I did it many years ago.

[boefixepa]

Just start small and pay all your bills on time. If you get credit cards, don't carry balances, pay in full each month and then you just have to patient. It does take time.

[Ima saver]

I was told that my score would be higher if I had a mortgage that I was making payments on. My house is free and clear and has been for almost 30 years. I bought a piece of property and put a mortgage on it. I paid early and pay extra on the principal. I have paid off over $40,000 in less than 2 years. My score is 817.

[tinapbeana]

ok, here are the tips i've either found, used, or heard. please bear in mind there are others on this board that may either disagree or have much better input, so YMMV (your mileage may vary).

1. credit cards: these are a fairly easy way to establish good credit if you are responsible about it and IF YOU HAVE A PLAN . CCs companies keep track of if you were on time or not, if you paid less or more than the minimum, if the account was paid and closed or just closed and continues to pay as agreed, etc. having one card where you pay the balance each month shows consistent responsible credit usage. other things to consider are store cards (i.e. Target or someplace you shop a lot) that have a very low limit (mine was $250). this is something you can easily use a few months, pay in full as you go, and close out. i have even heard of applying for a card at a jewelry store, buying an item, returning the item (which pays the card), and then closing the card, but i myself have never done this.
2. bank accounts: have more than one. i.e. have a checking and a savings. with online banks, you can easily have more than one savings account.
3. other types of accounts (i.e. utilities): these usually only report if you are late or in default. making sure everything here is covered should keep your credit from going down but may not help it come up.
4. when it comes to applying for credit, some places look at some pretty oddball things. have utilities in your name, especially a non-cell phone.
5. major purchases: anything that is bought on credit and then paid in full (CCs, car, house, jet ski, jewelry, appliances) gets reported favorably.

biggest thing, though, is to NOT go apply for everything willy-nilly. when people pull your credit it shows as an inquiry, and inquiries hurt your credit score (it looks like you're desparate for someone to give you money). have a plan of applying to X companies for small balance cards over the course of X months (i.e. 3 cards in 3 months). whether you're approved or not, don't apply more than you're scheduled for.

along those lines, avoid moving every year if you can: most apartment complexes and even standard landlords will pull your credit, and again those inquiries can add up. plus, most places want to know if you've been at your current address less than or more than a year.

my sister is a loan officer at my credit union; i'll see if i can pump her brain for more suggestions...

TinapBeana has great advice on this subject. I bought a book on credit repair a few years back and found out that one of the most effective ways to keep credit scores up (besides paying on time) is staying below 35% of your credit card maximums. I didn't really think much of it until I paid off enough to put my Best Buy credit card below 35% of my limit with them. This is why many people say use a small credit card for small purchases, like gas. Then pay it off before 30 days have past so you don't get hit with interest. Really helps with scores.

[vsjhoc]

I agree with the keep-it-under-35%-of-your-credit-limit rule.

As far as your credit score is determined, it doesn't matter whether you pay the balance in full each month or not, provided you pay at least the minimum due by the due date.

What matters is what your balance is on the day that the credit card company reports it to the credit bureau. Say you have a limit of $1,000 and you charge $500. Your due date is on the 31st, and you pay the whole $500 on the 29th. But if your credit card company reports to the bureaus on the 28th, your report will show that you have a balance of $500, and your credit score will calculate it as 50% utiliization on this account. It doesn't matter that you pay the whole balance off the next day, even before the due date. So try to find out what day of the month your accounts are reported, and make your payments accordingly (making sure you don't inadvertently make a late payment, of course!).

[Ima saver]

That advice about not moving is a good one. They want to see you stay at the same address for several years. I bought a car in another state and I had all the paperwork sent to the house I owned in that state. That made it look like I had moved and that was not a good idea!