How to add positive credit to your credit reports

By Lisa Phillips on May 13th, 2012 in How to Guides, Rebuild Credit Scores

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. Adding positive credit is an integral part to rebuilding credit history.

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.

Unsecured credit card to add positive credit

Credit One Bank – Visa®Platinum Card can help you add positive credit as well as rebuild credit. The reason I like this card for consumers looking to rebuild or build credit is that Credit One Bank pre-qualifies you before an actual hard inquiry is placed on your credit report. This can save points being deducted for credit inquiries. Even though consumers with low credit scores have been approved for this card it is still comforting to know they pre-qualify you first.

Secured credit card to add positive credit

Secured credit cards offer many of the same benefits as unsecured credit cards. You determine your own credit limit with a FDIC insured savings deposit used to secure your credit card. The Applied Bank® Secured Visa® Gold Credit Card has no annual fee or account set up fees, you can choose your credit limit from $200 to $5,000 and there is monthly credit bureau reporting. Even though you are securing your credit card with a deposit, payments must be made on-time and account balances should be kept low just like an unsecured credit account.

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.

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 fairly decent 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.

Retail Credit Accounts

Retail credit is typically easier to qualify for than a visa or mastercard; however the interest rates may be slightly higher than credit card interest rates. But 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.

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.