'What can I do to increase my credit score?'

Suzie from Washington DC -

I don't have bad credit, I just don't have much credit at all. I don't want to loan for a car or house. I just want to build credit. How can I get my credit built up without a huge purchase like this?

Comment #1 Elroy from New York -

Can you afford $100/mo?

Go to you bank and take out a $2000, or $2500 loan. Secure the loan with a $2000 or $2500 CD. That is put the money from the loan into a CD and that CD is the security for the loan.

For the best results make it a 3 yr loan. Pay your $100 or so payment every month and at the end you'll have a great entry on your report and a CD with more money than the total of your payments.

In less than a year you should start to get credit card applications in the mail. Get one of those and use it, but make sure to pay the bill every month.

Now you will have two great entries on your report.

The secured bank loan is a good idea even if your credit is bad, because it will start to show something good.

Comment #2 Sweetness from Earth, the Universe -

There is another way of doing it at the bank. That is to take out a small loan for say $500.00 to pay off some debt or to purchase something. Put that $500.00 into an interest bearing account... you won't make much interest but it will be there for you to use to pay back the debt. Pay back the debt for about 3 months and then pay the full debt off outright. Your credit rating goes up.

Then go back to the bank and take out a $1, 000.00 loan to purchase a stereo system. For these small loans they usually will even take an insurance policy as security on the loan. Again, make payments from the money for the next 3-4 months and then pay the loan back in full.

Keep doing this over the course of a year increasing the debt each time and paying it off early and you will definitely get your credit score way up there.

Then as was said you will get credit card applications and you put $50-$100 on it each month (as much as you can afford) and then pay it off in full each month. Within a short period of time your credit balance will be increased. So say you start with a $1, 000 credit on the card within a very short time it will be increased to $1, 500.00. BUT you have to pay it off in full each month and not carry a balance.

Comment #3 peekaboo from from my desk! -

Do you have any credit cards at all? I never liked the idea of going to a bank and taking out a loan and paying it off just to build up credit.

The reason I asked about the credit cards, that even though revolving credit cards (store cards) can lower your score, it is a good way to start building up credit. Make small purchases and pay them off. In about six months apply for a visa or mastercard. You should see you credit increase over time as well as your credit score.

Comment #4 snowbird (1) from The North -

You could go to any department store, and I'm sure they will give you a credit card with a low borrow amount, maybe like $200. you could start that way and build your credit slowly. I too never like borrowing money from a bank and having it sit in your savings account so you could just make payments.

Comment #5 PATRICK from HOUSTON, TEXAS -

These are all great but the problem with secured loans is that your debt ratio is thrown off. Yes they will help you establish credit, but will drop what is known as your fico score.

One way to build your credit is a secured credit card. Shop around for a company that doesn’t list your card as secured. Plus don’t pay a yearly fee to use their card. Most companies will give your security bond back to you at the end of a year with interest. That means your card becomes unsecured. This is an excellent way to build your credit.

One more thing. Whatever you do, don’t max out that card. Keep a balance on the card so you can make payments. This will actually hurt your credit rating. Before the year is up you will probably a couple of other unsecured credit card.

Comment #6 Olivia from Online -

Whatever you do, once you have your credit cards paid off, don't close the accounts!! I made the mistake of closing about 5 of my accounts because I had paid them off and that actually hurt my credit. I still don't understand the reasoning for that but just a word of caution.

Comment #7 Tam from NY (24.161.66.29) -

also another word of caution. When you take the loan whether secured or unsecured, depending upon your situation, make sure when you pay it off you take at least 1 full year to do so otherwise that will also hurt your credit score. Paying off a loan early is great, but paying it off in less that a year doesn't show the loasn as established and a credit company wants to see that you can pay for a length of time also, pay a little extra, even if it is only 5$, then you get marked as an over payer as well as being on time, which may bring up your score.

Comment #8 vanessa (68.60.153.243) -

I need help!

I have a really bad credit score...

and its hard for me to get ANY kind of credit card!

i have tried everything....

i applied for many credit cards and my mother told me that when i do that it actually lowers your credit score when i get denyed..

I DIDNT KNOW THAT!!!! so now...i am...worse than i was??!!

what can i do????

HELP!!

Comment #9 lazae (66.216.159.130) -

PAY FOR EVERYTHING IN CASH.

YOU CAN RECEIVE TO TYPES OF HITS WHEN YOU GET YOUR CREDIT CHECK OUT. A SOFT HIT AND A HARD HIT THE SOFT HIT IS WHEN YOU CHECK YOUR OWN REPORT THAT DOES NOT AFFECT YOUR SCORE BUT A HARD HIT IS WHEN A COMPANY CHECKS YOUR REPORT AND THAT HURTS. ALL YOU NEED TO KNOW THE BASICS AND THAT WILL GET YOU A LONG WAY OK LET ME EXPLAIN YOUR SCORE IS BASED ON THESE FIVE RULES PAYMENT HISTORY 35% AMOUNTS OWED 30% LENGHT OF CREDIT HISTORY 15% NEW CREDIT 10% TYPES OF CREDIT USED 10% SINCE YOU CANT GET A CREDIT CARD I ADVISED YOU TO GET A PREPAID CREDIT CARD THEY WORK JUST AS WELL AS THE OTHERS AND IF YOU HAVE ANY ACCOUNTS PAID OFF YOU CAN WRITE TO THE CREDITORS TO GET IT REMOVED AND IF NOT YOUR FIRST STEP IS PAYING EVERYONE OFF. HOPES THAT HELP

Comment #10 Julia Santiago (68.247.20.230) -

I would like to increase my credit scores during the next 12 months. What should I do?

Comment #11 Mrs understanding (204.181.6.4) -

To Mrs Vanessa.

You can save about $500 and go to the bank where you bank is best. Get a secured card for the 500.00 Use it for what ever as long as you can pay the amount the following month. you will have less risk because one there is usually no interest rates and the late payment and over draft fees are cheaper because its like you borrowed your own money. you do this for about a year and cards will be flying your way. I filed bankrupcy and the next year I was buying a home. Now 2 years later i have a 7000 card that was sent out of the blue and 1 600 card. I have 4 but cut them down after i got my big card.

good luck!!

Comment #12 Dinah (69.136.91.237) -

I had a really bad credit score of 434 and I have worked on it and had managed to increased it to 561 mid score and now I had applied for a secure credit card but I only put 200 dollars on it. do you think I should put more money on it, will it help or hurt my credit score. Is there another way to increase my credit some more?

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