Your credit report reflects the ability to manage debt and handle credit responsibly. If only negative credit exists on your credit report, the credit scoring model will calculate your credit score low because it appears as though you are a high risk for default.
One of the best ways to change your credit score is to add good credit to credit reports in addition to paying all obligations on time. You can add good credit to your credit reports with easy to qualify for unsecured credit cards, retail credit cards and even secured credit cards.
The shopping cart trick is resourceful for opening small-dollar retail credit accounts. It does not require hard credit inquiry or perfect credit.
Adding credit card accounts does not mean adding debt. Never use credit cards as an extension of your paycheck. If you cannot cover a credit card charge with your next paycheck, don’t make the purchase.
The best way to use credit cards without adding debt is to pay credit cards off each month. When you pay your balance in full you’re making sure you stay within your means and you’re also avoiding credit card interest charges and racking up debt.
Use your credit card for small purchases like lunch, gas, groceries or utility payments. These are typically expenses you would normally pay cash for but using a credit card instead will help build your credit.
1. Unsecured credit cards
An unsecured credit card will help raise your credit score by reporting on-time monthly payments to your credit reports. Payment history constitutes 35% of a credit score. Making timely payments on any credit obligation will be weighted heavily in calculating a credit score.
Unsecured credit cards can be difficult to obtain if you have bad credit. The options are limited but there are a few that exist, with good interest rates. First Access Visa® Card reports monthly to all three major credit reporting agencies and perfect credit is not required for approval.
2. Secured credit cards
A very simple way to add good credit to your credit report is to get a secured credit card. Most consumers can qualify for a secured credit card because collateral is required upon approval for a secured credit card. The collateral is a cash deposit usually held in a savings account, some are interest bearing and some are not. The credit card issuer will then extend credit for the amount on deposit in the account or an amount slightly higher than the balance.
Most secured cards allow a deposit from $200-$5,000. Secured credit cards are no different than unsecured credit cards. Payments are reported to the credit bureaus and must be made on time. Many secured card issuers will grant you an unsecured credit card after a series of on-time payments, usually 12 months.
3. Retail Credit
Retail credit cards act much like unsecured and secured credit cards. They report to at least one of the major credit bureaus and payments must be made on-time. Some retail cards are easier to qualify for than unsecured credit cards.
A great on-line retailer is Fingerhut. Fingerhut carries everything from electronics and computers to clothing and appliances. They have over 500,000 products across dozens of categories. In addition to carrying a variety of brand name products they provide an opportunity for consumers to build their credit history.
Extra Tip: Shopping Cart Trick
You may have heard of the “shopping cart trick” over the Internets. If not, the “shopping cart trick” allows people to obtain a credit card without a hard credit inquiry on your credit reports.
Retailers offering accounts without the need for a hard credit inquiry often extend credit to people with low credit scores. The reason people with bad credit get approved is that some companies pre-approve you when you add items to your online shopping cart, without actually pulling a hard credit inquiry. Instead, a “soft pull” on your credit report is done.
There are a few steps you need to follow for the shopping cart trick to work:
- Turn off your pop-up blocker and clear your web browser.
- Create a new account at the company website where you want to open a credit account plus, sign-up to receive emails.
- When creating an account make sure you enter your information as it appears on your credit report.
- Only use the last 4-digits of your Social Security number. If they ask for your full Social Security number, do not complete the form.
- When shopping, place only a few items in your shopping cart totalling no more than $100.
- Go to check out. Manually enter your billing information, typing slowly. Do not use the auto-complete feature that your browser may provide.
- If it’s working correctly, a pop-up window will show up with a credit card offer. You will know it worked if it asks for the last 4-digits of your SSN.
- If it doesn’t work right away, keep a lookout in your emails. You may receive an offer in your inbox.
- Repeat the process for other retail accounts. But only open two or three retail accounts using the shopping cart trick.
- Don’t expect high limits with these retail accounts. They usually start low but will grow as your credit scores improve.
The shopping cart trick is a tool you can use to add positive credit lines to your credit report without the hard inquiry.
Here are a list of retailers that may offer credit accounts without a hard-pull:
Avenue Credit Card
Bath & Body Works
Bon Ton Credit Card
Boston Store Credit Card
Brylane Home Credit Card
Buckle Credit Card
Crate and Barrel
David’s Bridal Credit Card
Express Credit Card
Home Shopping Network (HSN)
J. Jill Credit Card
Justice Credit Card
King Size Direct
Lane Bryant Credit Card
La Redoute Credit Card
LOFT Credit Card
Mandee Credit Card
Maurices Credit Card
New York & Co. Rewards Credit Card
Newport News Credit Card
One Stop Plus
PacSun Credit Card
Peebles/Stage Stores Credit Card
Pier 1 Credit Card
Pottery Barn Kids Credit Card
Pottery Barn Credit Card
Restoration Hardware Credit Card
Spiegel Credit Card
Sportsman’s Guide Visa
Steeles Credit Card
Talbots Credit Card
TigerDirect Credit Card
Torrid Credit Card
Venus Credit Card
Victoria’s Secret Credit Card
Vitacost Rewards Mastercard
Woman Within Credit Card
With any new or existing credit accounts you should never have a balance higher than 30% of your available credit limit. For example, if your credit limit is $500 your balance should never exceed $150. Use the credit card regularly but make sure you stay within 30% of your available credit limit.
Your credit scores will increase over time with low credit utilization and timely payments. Even if you can only make the minimum each month, make sure it is on time and never miss the minimum payment due.