How can I raise my credit score?

Question

I'm 29 and have no outstanding debt other than student loans, which are in repayment and on time (always have been.) I've had a few accounts go to collections in the past, but never for more than $100. It's when I was young and irresponsible. They've all been paid off.

I have no major credit flaws (eviction, divorce, etc.) yet I still can't get approved for the most basic department store card.

I have had checking and savings accounts in good standing for over 10 years, a Visa debit card, plus the occasional utility bill in my name. I've never had a credit card, though.

What are some things I can do to increase my credit score? Please be as detailed as you like.

I have no errors on my report (I just checked) and I have paid off a car loan.

Answer 1

Maybe with a prepaid Visa or MasterCard

Answer 2

I'll suggest that you check with Equifax.ca just to find out if there is something there that you do not know of. When you pass by Cdn tire or Bank of Montreal and the reps ask if you would like to apply for a card, do so. The trick is to pay your bill on time but not off all at once. A dateline or 48 hrs show in the summer had some info about this. they also mention not to cancel cards that you have. What you can do is to call the card office and ask them to suspend/deactivate your card. If you plan on using it later call before hand and have them re-activate. But look into the Equifax report first before your get a card. You may not have establish a record to substantiate a credit record. You are a credit risk now never mind if you have the ability to pay off a card instantly. This credit business is a necessary evil. Thread cautiously.

Answer 3

It's the accounts that have gone to collection that is your biggest problem. The small amounts don't matter, but they are really hurting you.

Since you've paid them off, you need to work on getting them off your credit report. The best way to do that is to call the companies, confirm that they've been paid off, and then ask them to remove them. It will take some legwork: phone calls, letters, etc. But it's worth the effort.

Next thing you need to do is get a credit card, but use it wisely.

-Dept. store charge cards are easier to get than VISA/MC.
-There are credit cards that specialize in people with bad credit:

http://www.0-apr-creditcards.com/bad-credit-credit-cards.htm

http://www.bestcreditrates.net/

-You might also want to start off with a secured credit card (you make a deposit, and that's the amount of your credit limit, so it's like you're borrowing your own money.) It's not the best deal, but it's a good way to build credit.

Best of luck. You sound like a very responsible person, I have no doubt you'll solve this problem.

Answer 4

As I understand it, using a credit card and keeping it paid off, is important. There are cards which only give you a low limit which may be easier to obtain. Taking out a loan for a car or home and keeping current on it is the other major factor. I have heard that the credit score is kind of like the way financial/lending institutions rate us. They love us to pay interest on everything else we buy.

Answer 5

If you have been in good standing with your bank why not try and get a credit card with them or another bank. It is harder to get a creit card from a department store than say a visa or mastercard. Keep your balance low or charge something and pay off right away. If your balance gets close to the limit it isnt good for your credit. You can also get a credit card easily that you put a deposit down on. They charge it to the credit card and you pay it off. If thats all that you can get go for it at least it will help your credit score.

Answer 6

First, you can get a free copy of your credit report, one per year from each bureau. Go to www.annualcreditreport.com to do this (they will provide the option to get extra add-ons, like scoring and debt analysis, at a charge, which I don't recommend because you don't need that info now). A nice feature to note (on the TransUnion report) is the estimated date of removal--the negative items on your credit report will come off eventually, and this tells you when, which helps you plan.

The first thing to do is make sure that there's nothing erroneous on the reports, and if there is to dispute it. To dispute stuff, go to each of the three bureaus' websites (transunion.com, equifax.com, experian.com) and it's fairly self-explanatory from there. That alone might raise your score. Something to watch for is duplicate reporting: when a creditor sells a 'bad' account to a collection agency, the collection agency then reports it to the credit bureau. They're supposed to only have one record per account, so if an $89 power bill that went into collections has been reported by both the power company AND a collections agency, then they'll remove one of the two.

The next thing to do is to get some positive accounts on your credit report to balance out the negative ones (even though they've been paid off, they're still counting as negative because they were once in collections. Paying them off helps, because it doesn't weigh as heavily against you once it's been paid, but it's still not the same as if it had never gone into collections in the first place). The checking account, savings account, and utility bills do not show on your credit report unless they go into collections (not fair, I know--it's because they don't lend you any money, and unless you go into the hole with them they don't count it as credit). Go out and get yourself a couple of credit cards ASAP. If no one will give you credit, get secured cards (you send them $200 or so and they use the deposit as your credit limit, but still report to the credit bureaus). Don't go overboard and get a ton of them, because having a bunch of available credit--especially that was opened all at once--will impact your score negatively because lenders view it as a risk (i.e. you could max out all your credit cards and move to Jamaica, never to be seen again). Creditors look for slow, steady credit growth with good payment history. So do that. A car loan, also, would help.

Any credit you manage to get now will probably come with crappy interest rates, so plan to close the accounts and open new ones in a year or so (when your credit's better and you can get a better rate). A closed account that you always paid perfect on is probably the best thing you can have on your credit report, because it's a permanent good mark that can't go bad (either by you forgetting to pay or the creditor making a mistake in reporting). Even if you got a credit card and then cut it up and NEVER used it (unless there's like an annual fee, which you have to pay until you actually close it) it still goes on as a good mark!

Finally, monitor your credit reports with all three bureaus every year! Creditors make mistakes, you need to watch 'em.

GOOD LUCK. Bad credit sucks, but it's easy to fix.

Answer 7

What you need is to establish some credit, Go out and see if you can get you a small personal loan for something, make payments on it and get it paid off either on time or early. This is reportes to all of the agency that the agency may report to. Since they are not required to report to all 3 majors agency ask them prior to making any kind of commitment. Also bear in mind that you look at what kind of interest rates apply from the lender you are going to. Make sure all of the ins and outs look good to you, if they don't ask someone that know what questions to ask and go from there. Good luck

Answer 8

Buy a used Car just for that reason. I financed a car for less than $4,000 thru a credit union. You can't pay it off at once. You have to pay each montly bill to show you are capable of making monthly payments. I had bad credit. Now that I did that and paid it off, I have been able to be approved for alot more. I'll probably do it again just to help my credit score. After I paid it off, I sold it for the same amout and turned around bought something bigger and better.

If you have to work your way up.

Answer 9

As one poster mentioned, checking with your bank or credit union might work.

But, not having any revolving credit history is probably whats keeping you from getting cards. Also, some stores are not as easy to get as others.

You might try a secured card. If you go with a secured card I would recommend going with Bank of America. BofA will generally unsecure in 9 to 12 months if you keep the account in good standing. BofA will also grow with you.

You might try Orchard Bank or HSBC, they are good starter cards but they will not grow with you.

For store cards, you might try Walmart and also Chevron/Texaco. Chevron/Tex has a builder/rebuilder card where if you do not qualify for the regular card, you may be offered the rebuilder.

If you get denied for a card, call them and ask to speak with a supervisor. Ask them for a reconsideration and request that it be done without them doing another hard inquiry.

You also might go to the site I've listed. Click on forums and then look in the upper right for CreditPulls and click on it. Enter your score and do a search on cards that are approved with scores in your range.

Answer 10

Maybe you should apply for a credit card at Capital One online. Make purchases that you can pay in full when the monthly statement comes. Don't make the minimum payments, unless you really have to or really want to pay extra money.

Answer 11

One way is to get small loans from your bank and pay them off on time. They will show up on your credit report.