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How to pad your credit report if you have negative items

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The effects of good credit go well beyond getting approved for a credit card or loan.

Potential employers may request your credit report as part of the hiring process, in most states credit scores impact insurance premiums, and if you’re looking to rent an apartment or if you are self-employed and need to lease office space, you can pretty much expect a credit check to occur.

Even if you make plenty of money it still does not take the place of a bad credit report. Banks, employers, insurance companies and landords don’t care how much money you make if you have a history of failing to pay bills on time.

If the dispute process does not appeal to you there are several ways to overcome bad credit. One way is to pad a negative credit history with a positive one and here is how:

Establish a recent history of on-time payments.

Recent information has a greater impact on credit scores than old information. Credit scores are primarily based on the last 2 years of recent information. Even if you’ve been through difficult credit problems, it’s important to establish current, positive credit references that can boost your credit scores over time.

Open a credit builder loan at a credit union.

Credit Union Credit Builder Loan. Because installment loans diversify the types of debt you accrue and pay, they can positively impact your credit score if you pay them on time. Types of credit used–what kind of credit accounts you have and how many of each—make up approximately 15 percent of your FICO score. Check out your local credit union to see if they offer “Credit Builder Loans.” Credit builder loans generally range from $500 to $3,000 with repayment terms up to 36 months.

Not all credit unions offer these types of loans. The catch here is that you don’t actually get the loan proceeds. The credit union makes a loan then freezes the money in an interest-bearing savings account in your name. You then make payments, with interest, until the loan is paid off. At the time of payoff, you get the money, along with whatever dividends have been earned on the savings deposit. Borrowers have an excellent chance to build a positive credit history if payments are made on time.

Credit Builder Card.

easy-to-get-metal-credit-card-ChimeThe Chime Credit Builder Card is designed to help consumers build or rebuild credit by offering a credit card linked to Chime’s Checking account without requiring a security deposit. The Chime Credit Builder Secured Visa Credit Card makes qualifying simple:

  • No credit check to apply.
  • No annual fee or interest.
  • No minimum security deposit required.
  • The only requirement is that you have a free Chime Checking Account.
  • The money you move from your Checking Account into the Credit Builder secured account is the amount you can spend on your card.
  • The money you moved to the Credit Builder can autmatically pay your monthly balance on time with the Safter Credit Builder feature turned on.
  • Reports to all 3 credit bureaus to help you build credit over time. Members see an increase of 30 points on average.

Extra Debit Card Reports to the Credit Bureaus.

The Extra Card builds credit and earns rewards points just like a credit card except there’s no credit check and no deposit required. Every purchase builds your credit. Purchases made with the Extra Debit Card are tallied up and reported to credit bureaus to help build your credit history.

Here is how the Extra Card works:

  • The Extra Debit Card makes it simple to start building credit with no credit check.
  • Start by connecting your bank account to your Extra Card. Your spending limit is based on your bank balance.
  • Generally, the more purchases you make with Extra the more your Spend Power will increase.
  • When you swipe your Extra Debit Card, your purchase will be covered and after the purchase, Extra will pay itself back from your bank account the next business day.
  • At the end of each month, Extra will total up all of your transactions and report them as payments to two major credit bureaus – Experian and Equifax.
  • Because the Extra Debit Card temporarily extended credit for the purchases, you build a positive credit history showing payments made in full on Experian and Equifax credit reports.
  • The Extra Debit Card carries the Mastercard logo and works anywhere Mastercard does (except outside the United States, Extra only works within the US).

Show stability on credit reports.

Creditors like to see evidence of stability in your file. Clear up any discrepancies in your name, birth date, social security number, date of birth, current and former residence, and current employer. The only time you may not want all of your personal information on credit reports is when a creditor or collection agency is owed and you think you may be sued or when a creditor already has a judgment.

Current employment information may be a green light for a wage garnishment. Get more credit fix tips.

Add your telephone number to credit reports.

Believe it or not, something as simple as a telephone number could make or break a credit application. If you haven’t given the credit bureaus your phone number, a creditor may not be able to verify your identity. A creditor who cannot verify a telephone number may be reluctant to grant credit.

But keep in mind once your telephone number is on your credit reports, any debt collector who wants to collect from you will be able to reach you. If you are not yet ready to deal with debt collectors, you may not want to add a telephone number.

Request credit bureaus include all positive information.

Often, credit reports don’t include the same accounts on all credit bureaus. Sometimes creditors will only send information to one or two of the major credit bureaus.

If one report has credit information missing from others, send a copy of the more complete report to the other credit reporting agencies with a cover letter asking that the missing information be included in your file. Do the same if you’ve worked hard to clean up one report, and now want the others to reflect accurate information as well.

Revolving credit can show creditworthiness.

Revolving credit is the easiest way to pad your credit reports. Credit cards, secured and easy approval cards, credit accounts at retailers like the Gap or Stoneberry and even gas cards like Chevron can help pad your credit reports with positive information.

With revolving credit, it’s important to maintain a low balance and never use your total credit limit. FICO scoring formula seems to favor using 30% or less of your available credit limits. In fact, FICO said consumers with the 800 and above scores never use over 7% of their available credit limits.

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