What is the best way to build my credit?
Wednesday, August 26th, 2009 at
3:58 pm
coolking32 asked:
I just got my first Credit card with a $500 limit…How do i get my credit limit higher, and whats the best way to get my credit score up higher.
I just got my first Credit card with a $500 limit…How do i get my credit limit higher, and whats the best way to get my credit score up higher.
Tagged with: Credit Card • Credit Limit • Credit Score
Filed under: Credit
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Pay all your bills on time. Don’t ever be late, it takes 6 months to recover from just 1 late payment. Also, keep your balance low, maybe even to where you can pay it off at the end of the month.
only use half of what your limit is and pay more than your minimum on time. Keep these simple two steps and they will up your limit with no problem.
Well, you are on the right track at getting your credit established by getting a credit card. As you continue to use your card and make your payments on time your credit limit will rise, which will also raise your credit. It just takes time and patience. I have credit card with Washinton Mutual, and they allow you to check your credit score for free, so you can see where you are at. Also, check out some of these sites for tips on building credit:
Good luck! Basically take it slow. Get one more credit card–that’s it, and maybe get your name on some bills–PG&E(power and electricity).
Make sure you pay off the entire balance each month or at the very least keep the balance under 50% of the creidt limit. this will make a great different. You should be fine after 6 months of paying on time.
pay all bills on time
not go over you limit
and don’t spend more then 50 % of your limit
First of all paying off the balance every month is a BAD idea to build credit.. the cards dont make any money that way because interest cant apply. the FICO score calculates highest with %30 of the credit limit as a rolling balance (so on a $500 card keep a balance of $150 month to month). It’s also important to keep the payments on time every time, and keep a mix of different types of debt (car loans, credit cards, mortgage, personal loans, etc), however things like utility bills and apartment rent only get reported if your late. some gym memborships will report posative info. It’s important however to keep your DTI (Debt to income ration) around %30-%40 as well. IE: if you make $4k per month your debts should be around $900-$1200. after 3 years of all of these factors staying steady your credit score will be as close to perfect as it can get.
First it would help to know what makes up your credit score:
1. Payment history- 35%
2. Total debt owed vs. Available credit 30%
3. Length of time establishing credit 15%
4. Types of credit establihsed 10%
5. Inquiries and New accounts 10%
As you can see, #1 & #2 are the most important. So with that said, paying on time and not maxing out your card is the 2 best things that you can do as far as working your way to a higher limit. Make small purchases (around $20-50/month) so that you don’t go over 25% of your available credit. For example you should spend no more that $125 on your card, to be okay.
And as far as to get your score higher. One thing that you don’t want to do is apply for a bunch of credit cards. You already have one and you’ll need to wait at least a year for that payment history to show up on your report before more offers can come to you. After you get that, you may want to apply for a department store credit.
Finally, enroll with PRBC. They’re a new credit bureau that report payments like rent, insurace, utlities. etc. in a scored report that can be used along with your credit reports. There’s a lot that is covered on that website, I strongly advise you check it out!
I ought to get paid for what I’m about to tell you!
1st, go buy something you need,spend only 1/2 your credit amount.
2nd, when paying off, pay more then the little min. payment;you should try paying on time each time.
3rd, after a yr, ask for a increase to your account, from the $500.00 limit it sounds like a card with high APR %.
Nut shell: creditors look at how long, how many cards applided for ( get just 2-3max ) visa-mastercard,discovery;there are only a few banks that handel all the various credit cards – at last look I counted 6 banks and just 1 holds close to 50 different credit cards by other names,so keep your spending at 50% of account max.
to raise credit score
1. Always pay on time or ahead of time.
2. maintain low balances on credit cards
3. keep your total potential debt to earnings load low – If you have a card with a $15000 credit line, you may ask them to reduce it to something more realistic, like $5000.
4. I was told by an underwriter that having just two cards, a major credit card (VISA, MC) and a consumer card (Sears, best buy, etc…) is the best mix for revolving credit.
5. You should have a recent history of both installment or term (Car or house loans) and revolving credit.
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