Home  Personal-Finance Can I Build Positive Credit?
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Can I Build Positive Credit? |
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Written by JesseSmith
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Sunday, 31 January 2010 |
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In order to raise your credit score, you need to know how to build positive credit. Building positive credit will mean that you will be eligible for low interest credit products which will save you money.
by JesseSmith
In order to raise your credit score, you need to know how to build positive credit. Building positive credit will mean that you will be eligible for low interest credit products which will save you money.
Some people believe that building positive credit means charging exorbitant amounts to their credit cards and then paying those credit cards off each month. This is not necessarily true and, in some cases, can hurt your credit standing. For example, credit providers look at how much of your available credit has been used. If you apply for credit and, when the credit provider reviews your credit report, it shows that your credit cards are almost at their limit, this will make you look like a bad credit risk.
Also, you don't want to give the impression that you are spending over and beyond your means. Even though this may not be the reality of your situation, it may still appear that way. You may want to rethink the "charge everything and pay it all off at the end of the month" strategy.
It is also best not to have large amounts of unused available credit. So, what is an acceptable amount of credit to use? Well, a good guideline would be to use somewhere between 10% and 20% of your available credit. Credit providers will take this to mean that you can refrain from running your credit cards up while, at the same time, making your payments on time and as agreed.
It is important to maintain at least one credit card. If you are worried about approval, there are credit card providers that offer credit cards to people who suffer from poor credit. You should be on the watch to maintain the 10% to 20% rule noted above. You should not incur large amounts of monthly interest if you follow this guideline. Also, you should make sure that any credit cards you have or that you subsequently obtain are reported to the three major credit reporting bureaus - Equifax, Experian, and TransUnion.
Pay at least the minimum amount due each and every month and be diligent in never being late. If you follow these two rules, your credit score should begin to increase.
Small low-interest personal loans can also be used to build positive credit. Follow the same strategy of paying at least the minimum amount due each month and paying on time. In short, you can use any credit product to build positive credit as long as you use it responsibly and wisely.
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