what's the most effective method for buliding up your credit score?

Answer 1

Everybody's talking about what to do to build up the score, but I think that it would help even more if you knew what actually made up your score to give you a better idea.

1. Payment history- 35%
2. Total Debt vs. Available Credit- 30%
3. Length of time establishing credit (average age of accounts)- 15%
4. Types of accounts established 10%
5. Inquiries & New Accounts- 10%

With all that said, now what you can do is this:

1. Review all your credit reports and dispute anything that you know's not correct with the credit bureaus. Incorrect information someway somehow winds up on reports bringing down scores.

2. If you have any accounts in collections, make arrangements to get them taken care of. Here's a link that I posted to a website that explains in detail on how to setlle debt with collectors (READ THE ENTIRE ARTICLE CLOSELY. THERE ARE 3 PARTS TO IT)

3. And whatever open accounts that you do have, make sure that you pay on time. If don't have one already, open a checking account and take advantage of their online banking with billpay feature. Like I mentioned earler, payment history counts more than a ⅓ of your score, so pay on time!

4. If you have credit cards, try to pay the balances on them to where they're around 25% or below the available credit at any given time. Having cards that are maxed, or close to it hurts your score. Also after you've cleaned up delinquencies, and paid down your balances, ask for an increase to give more cushion to your available credit.

5. If you have old accounts that you're not using, start using them instead of closing them. The longer you've had an account, the better, since this would be considered a "seasoned account" especially if it's been opened longer than 3 years. Start cancelling accounts, and it will give the appearance that you've established credit more recently than it actually has.

6. Don't apply for unecessary credit. Each time you apply it creates a "hard inquiry" that can drop your score several points regardless if you're approved or not. And it can take anywhere from 6months to a year for your score to increase if you are approved once the new account starts reporting.

7. If you don't have any open credit lines, and you're needing to establish credit, the easiest option would be opening a secured credit card which are offered at a lot of credit unions and at some banks. You can think of ths as building credit with a savings account because that's basically how it works. A deposit is placed upfront usually linked to a savings account that's used as collateral to establish a credit line of the same amount. For example, you place a deposit of $250, then the credit line would be $250. You still would receive a statement and have to pay for whatever's used on the card since the deposit is only for collateral. While placing a deposit may seem like a disadvantage, there's more hidden advantages like the deposit gaining interest while you're building credit, and the ability to increase the credit line by adding to the deposit. And a tip to using the card is to make small purchases ($20/month) that can be paid off every month to keep the balance on the card in check. Usuall anwhere after a year or so of paying on time and keeping the balance low or even at 0, the card either converts to a regular card or a better card is offered and best of all, you get the deposit back with some added interest. (I posted links to several secured credit card companies)

8. You should have anywhere from 1-2 major credit cards, and 1 department store card to start out with. Of course you can get more, but it's not wise to load up on credit cards alone. Student loans, furniture loans, appliance loans, car loans, boat loans, motorcycle loans, and mortgages all are example of installment credit and it helps to have 1-2 of those to create a balanced mixture of credit.

I know that it's a lot of information, but I'm confident that it will help you out a lot.

Good Luck!

Answer 2

One popular approach is to start by calling your credit card companies to request a lower interest rate. Your chances are higher if you have a clean record. Then, you can either 1. Each month, pay as much extra as you can on the card with the highest interest rate; or 2. Use the extra towards the card with the lowest balance. Option 1 is the best purely financial move. Option 2 gives you the psychological satisfaction of seeing that over time, the number of accounts paid off is growing faster. Some people feel that it's good to apply for new cards with introductory 0% offers, then transfer the balances to the new cards. That can work, but too many people just end up running up the balances again, so I don't recommend it unless you can be absolutely sure you won't do that.

Answer 3

First, make sure all the information on your credit report is accurate.

Second, try to pay off all or any accounts that are currently in collections or make payment arrangements with the creditor to pay off the balance monthly.

Third, any credit card that is over 50% of the available credit line should be paid down to under half of your total credit line. Your credit score is lowered when your available balance is over 50% of your total credit line.

Finally, if you have bad or no credit and have no credit cards try to obtain two credit cards and make sure all of your monthly payments are made on time. This will help increase your credit score. If you cannot be approved for a unsecured credit card, obtain a secured credit card.

Answer 4

How to improve my credit score? To find out specifically what you must do to raise your score, you can order your score report from all three national credit bureaus. In addition to your scoreyou still have to pay to find out your credit score, the three-digit number ranging from 300 to 850 that is the key to your borrowing costs.

Answer 5

Check out http://www.your-credit-solutions.com/creditsolutions.htm . I used there #1 solution and was able to increase my score by 200 points.

Answer 6

Make sure you pay at least your minimum payment on time. If you can pay it off in full bye the due date.

Answer 7

pay off all old debt
pay bills on timeh

Answer 8

Pay your bills on time.