| Millions of consumers have less than perfect credit and | | | | handle making at least two payments per secured |
| it can be frustrating. Credit has permeated our society | | | | loan before the actual due dates. When the banks |
| and having low credit scores costs you money. Credit | | | | report to the credit bureaus they will show these |
| scores are the No. 1 determinant in a bank's decision to | | | | payments and you will have established an excellent |
| approve or decline credit. You may be approved for | | | | payment history within (30) days of obtaining the loans. |
| credit even though your scores are low but you will | | | | (8) Get a Secured Credit Card. Secured credit is a |
| undoubtedly pay higher interest rates. The following | | | | good option for those who cannot qualify for regular |
| are tips to begin rebuilding your credit: | | | | credit. Not only will you have the benefits of a regular |
| (1) Authorized Buyer or Piggyback Credit. Becoming an | | | | credit card but you will also get an opportunity down |
| authorized buyer also known as piggyback credit can | | | | the line to convert that secured credit card into a |
| be an instant way to boost your credit score. If you | | | | regular one. The same rules apply with a secured card |
| know someone who has a good credit history and | | | | in that you must pay your credit card bill on time and |
| score and is willing to add you to their account, this can | | | | you should keep your balances low. When seeking |
| immediately raise your credit score. There are | | | | secured credit make sure the bank reports to all three |
| companies that provide authorized buyer accounts for | | | | major credit card agencies, Experian, Equifax and |
| a fee. The credit card company will report to your | | | | Transunion. |
| credit files as well as the card holders'. The downfall of | | | | (9) Limit Hard inquiries. Hard inquiries can take up to five |
| becoming an authorized buyer is that if the person | | | | (5) points off your credit score. Applying for new credit |
| ever becomes delinquent, it will also reflect on your | | | | will lower your credit score. Keep inquiries at a |
| credit report. However, if this happens, you can always | | | | minimum. Additionally, any company that pulls your |
| dispute the account and the credit bureaus will have to | | | | credit report without your authorization is in violation of |
| remove it because an authorized buyer is not | | | | the Fair Credit Reporting Act which allows only |
| financially responsible for the account. | | | | authorized inquiries to appear on your credit report. |
| (2) Retain Old Credit. Maintaining older credit gives you | | | | According to FCRA rules you are entitled to $1,000 for |
| a longer credit history. This is important because credit | | | | each unauthorized hard inquiry. (New Credit |
| history constitutes 15% of your overall credit score. | | | | Applications is 10% of your credit score) |
| (3) Apply for Easy Credit. There are many companies | | | | (10) Know the Information reported by Credit Card |
| that do not require strict creditguidelines. These | | | | Companies. Make sure your credit card companies |
| companies extend credit to consumers with little to no | | | | report your limit and balance. Some may only report |
| credit history and less than perfect credit. You may | | | | your balance and not your credit limit. Lenders who |
| have to pay higher interests rates but if you pay on | | | | engage in this practice may actually be causing your |
| time and keep your balances to less than 30% of your | | | | credit score to be lower. The scoring system will plug |
| available credit limit, you will build positive credit. Seek | | | | in your highest balance as your credit limit and if you |
| credit at your local appliance, furniture, jewelry and tire | | | | are currently at a high balance this can be detrimental |
| stores. In addition Radioshack, Fingerhut and Chevron | | | | to your scores. Capital One was notorious for this |
| Gas extend easy credit. | | | | practice; however, in August 2007 they changed their |
| (4) Balance Transfer. Do not transfer all your balances | | | | policy and will be reporting credit limits. This means |
| to one low interest rate card. You may get many | | | | many consumers who hold a Capital One credit card |
| offers for the best credit cards with low and even | | | | may see a boost in their credit scores. |
| zero percent interest rates, but if you transfer all of | | | | (11) Pay Obligations by the Due Date. Pay your |
| your balances to the one card then you run the risk of | | | | obligations by the due date. A late or missed payment |
| increasing your balance to limit ratio. A high balance to | | | | can drop a good credit score by 100 points or more. It |
| limit ratio lowers your credit scores. You should always | | | | may not make sense but if you already have negative |
| maintain a balance less than thirty percent of your | | | | entries on your credit report adding more will not hurt |
| credit limit in order to have good scores. (Amount | | | | you as much as if you don’t have any negative |
| Owed is 30% of credit score) | | | | entries. Regardless, paying on time can raise your |
| (5) Decrease Your Credit Card Balance. Pay down | | | | credit score. (Payment History is 35% of your credit |
| your credit card and decrease your balance to thirty | | | | score) |
| percent (30%) or less than your credit limit. Your credit | | | | (12) Zero Balances may Hurt Your Credit Score. |
| score will increase. The great thing about this technique | | | | Strange but true. If you have many credit card |
| is that it works whether it is a $5000 limit credit card or | | | | accounts with zero balances your credit score may |
| a $500 limit credit card, your credit scores will instantly | | | | be lower. Credit scores can be raised by maintaining a |
| improve. | | | | small balance (at least $10) on your credit cards. |
| (6) Get a Credit Line Increase. | | | | (13) Keep Balances to Thirty Percent (30%) of Credit |
| In the alternative, if you do not have the cash on hand | | | | Limit. Do not use over thirty percent (30%) of your |
| to pay down your credit card account, request a credit | | | | available credit. Keep those balances low and your |
| line increase but don't spend it! Many credit card | | | | credit scores will rise. Definitely do not go over your |
| issurers can increase your limit without running a credit | | | | credit limit. This hurts your credit score tremendously. |
| report. Make sure you inquire before you request the | | | | (14) Re-Aging to Improve Your Credit Scores. |
| credit line increase if you do not want to create | | | | Re-Aging is a technique used by creditors to get rid of |
| inquiries. | | | | your past-due account. You are no longer delinquent |
| (7) Get a Bank Loan Secured by a Savings Account. | | | | and your account status changes to “current” |
| If you have at least $500 cash on hand obtain a | | | | which increases your credit score. Request Re-Aging |
| savings account secured bank loan. Most banks and | | | | from your creditors. Re-Aging is a quick and free |
| credit unions do not run credit reports when you apply | | | | method to raise your credit scores, it gives you a fresh |
| for a secured loan. However, they do report these | | | | start. Federal guidelines dictate how creditors can |
| loans to the major credit bureaus, Experian, Equifax | | | | re-age accounts but essentially here is how it works: |
| and Transunion. Bank loans rank high in credit scoring. | | | | • The borrower has to demonstrate renewed |
| But don't stop at just one secured loan. Once you | | | | willingness and ability to pay the account on time. |
| obtain the first secured loan, take those funds, go to | | | | • The account should be at least nine (9) months |
| another bank and repeat the process. Now you have | | | | old. |
| two bank loans that will report to the credit bureaus. | | | | • The borrower should have made at least three |
| Make sure these loans are small enough that you can | | | | consecutive monthly minimum payments. |