(Updated February 2, 2013)
Consumers with bad credit often only concentrate on removing negative information while repairing credit.
But there is nothing worse than having only negative credit on your reports. Once you learn how to add positive credit to your credit reports an integral part to rebuilding credit history will be completed and credit scores will begin to improve.
Credit scoring needs something to calculate when determining a credit score, if there is nothing but negative credit, your credit score will suffer.
Adding positive credit to your credit reports can be done by getting a credit card, personal loan, car loan or even a retail credit account. Here are 5 Top Tips to Add Positive Credit:
1. Unsecured credit card to add positive credit
The Cerulean Discover® credit card carries the prestige of the Discover brand and can be used worldwide wherever Discover is accepted. Add positive credit to your credit reports and enjoy the flexibility of making low monthly payments on all your purchases. Your on-time payments will be reported to the major credit bureaus. Apply now for a decision.
The Continental Finance Matrix Discover® credit card can be used wherever Discover is accepted. Build positive credit by using your credit card responsibly. The card is designed specifically for consumers with poor or limited credit.
2. Secured credit card to add positive credit
Secured credit cards offer many of the same benefits as unsecured credit cards. The USAA Secured Mastercard helps you build and improve credit scores. When you apply — you’ll also be opening a USAA 2-year interest earning Certificate of Deposit (CD) that secures the Mastercard. The minimum deposit is $250 up to $5,000. Your deposit is guaranteed to grow. At any time you can add to the CD and it will increase your credit limit. Start adding positive credit today.
The First Progress Platinum Prestige MasterCard® Secured Credit Card has no minimum credit score required for approval. Monthly reporting to the three major credit bureaus can help establish credit history. Determine your own credit line with a secured, fully-refundable deposit of $300 to $2,000. Payments must be made on-time and account balances should be kept low just like an unsecured credit account.
3. A car loan will add positive credit
The credit scoring system rewards consumers who have a good credit mix and an installment loan such as a car loan will give you a good credit mix. If your credit scores are low you may be required to make a down-payment unless you utilize a lender who provides car loans for consumers with bad credit.
4. Unsecured or Secured Personal Loan
By adding a personal loan to your credit reports you not only create a good credit mix but also show you manage credit well enough that a bank considered you a good credit risk. If your credit is less than perfect you may qualify for an unsecured personal loan. If your credit is a little shaky ask your bank if they offer secured personal loans. A secured personal loan works much like a secured credit card where a deposit serves as collateral for the loan. In the case of a bank secured personal loan you may be able to use a savings account or certificate of deposit account to secure a personal loan. You can apply online for a personal loan.
5. Retail Credit Accounts
Retail credit is typically easier to qualify for than a major credit card; however the interest rates may be slightly higher than credit card interest rates. The Gettington credit account has a low APR making it easier to pay as you go. Gettington offers thousands of name brands along with flexible payment options. This is a great retail credit account that can help you rebuild credit and there is no annual or over-limit fee.
The Fingerhut credit account is another retail credit account which reports monthly payments to the major credit bureaus. With timely payments and account management, consumers with poor credit have the opportunity to build credit. Enter your name and address and find out if you are approved for a Fingerhut credit account.
Retail accounts are a quick and easy way to add positive credit to your credit reports. Your credit score may get an immediate boost just by adding a new account.
Keep account balances low
After you add positive credit to your credit reports you must not max out or charge close to the credit limit. Consumers who routinely max out credit cards are more likely to experience problems repaying the debt should a change of circumstance occur, such as loss of income or illness. The lower the utilization rate, the better your credit score.
Keep those balances low — And by low I mean do not charge more than 30% of your available credit limit. If at all possible aim for 10% of your available credit limit and your credit scores will get better and better as long as you pay all of your credit obligations on time.
Credit scoring models calculate the utilization of available credit because it is thought to be a good indicator of risk. Using too much of your available credit may land you in the high risk category.
New Credit Should be Reported to Major Credit Bureaus
All new credit accounts should be reported to the credit bureaus. This is how you will improve your credit scores. In the event you only qualify for a secured credit card make sure it reports to the credit bureaus. The ideal scenario is to have the credit card company report the account the same way an unsecured credit card is reported. No one will ever know the credit account is secured.
