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 add positive information to your credit reports an essential part to rebuilding credit history will be completed and scores will 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.
5 Tips to Add Positive Credit
1. Unsecured credit card to add positive credit.
For consumers with bad credit add positive credit to your credit reports with on-time payments from unsecured credit cards. You can pre-qualify quickly for the with no impact to your credit score. Many credit cards now offer monthly free credit scores to cardholders which can help keep you on track with rebuilding credit scores.
2. Secured credit card to add positive credit.
The OpenSky® Secured Visa® Credit Card reports to the major credit bureaus. You can manage your account online and there is no application fee or penalty rate. Your deposit is FDIC insured and you determine your credit line from $200 to $3,000.
Payments must be made on-time and account balances should be kept low just like an unsecured credit account. The OpenSky® Secured Visa® Credit Card is really easy to get. You will need at least $200 for a security deposit which is fully refundable, no credit history is required to apply, no credit check and no checking account necessary. Plus, it reports to all the major credit bureaus.
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.
In fact, there is an easy to qualify for cd secured loan. Self Lender allows people who need to build credit an opportunity to open a certificate of deposit for as little as $25 per month. Self Lender helps you get a small loan that you save in a CD for 12 or 24 months (FDIC- insured certificate of deposit bank account). The payments toward the CD is reported to all 3 major credit bureaus and at the end of account term you've built credit history and your CD savings unlocks. No hard credit pull and no credit history required.
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. There are some retail cards designed just for consumers with a poor credit history. These types of retail cards only let you shop from their catalog. You don't have to keep this type of card forever, use them to get inexpensive items to improve your credit history, then once your credit history improves, get credit cards for good credit. Here is a list of guaranteed credit approval cards.
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. In fact, the best credit scores have a credit utilization of 10% or less according to myFico, the most widely used credit scoring system. When attempting to improve credit scores do not charge more than 10% of your available credit limit unless you pay in full each month.
New credit should be reported to 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.