Four Ways to Add Positive Credit to Your Credit Report

Four Ways to Add Positive Credit to Your Credit Report

1. Piggyback on a friend

If you know someone (a friend or parent) who has good credit, you can "borrow" that person's good credit listings. This friend must have credit card(s) and must trust you enough to allow you to become a "co-signer" on his card(s). Have your friend call the credit card company and request that you be placed on his card as co-signer. A copy of the card will be sent to you, but you never have to use it. (You can simply return it to your friend.) Your credit file should soon show an open account with all of the positive history that your friend has created over the years from that credit card. Remember, however, that when a new credit grantor reviews your file, he may insist that the balance on the card appear on your debt-to-income ratio balance sheet. So make certain that your friend doesn't have excessive debt, although this shouldn't disqualify you for credit if your income is sufficient and you don't have an excess of debt on your file.

2. Get a secured credit card

Ask your local bank if it offers secured cards. Many national banks are starting to offer this service. Your past credit is less important when applying for a secured card, as you will be depositing funds into the bank to secure the credit line on the card. You can get this card even if you still have bad credit on your credit file. By putting $500 into a savings account, you will be allowed to charge up to $500 on the card. Some banks may give you a credit line that is two to three times the amount of your secured deposit.

Make sure that any credit card you get is not listed as a secured card to the credit bureaus, and that it also lists your credit limit. If your card does not have these characteristics, you could actually be damaging your credit by getting one.

3. Seek easy credit

Many stores extend credit without tremendous regard for the credit standing of the applicant. These stores usually can be found in industries with small products or traditionally high mark-ups. Here is a list of creditors who often will extend credit to those without much credit history:

¦$• Jewelry stores;

•¦¦ Furniture stores;

¦$• Tire stores;

^ Appliance stores;

^ Gas companies;

^ Easy credit auto dealerships; and

^ Credit Unions.

Make sure that these companies report to the credit bureaus, as not all of them do.

4. KEEP YOUR ACCOUNTS ACTIVE

Once you've successfully received new lines of credit, it is important to have activity on them each month. I don't suggest that you pile up large debt—maybe maintain a balance of $50 dollars or so. Pay the minimum when the bill arrives even though it will cost you a little in interest charges. And pay it on time. This is what future loan officers and other creditors want to see. (Inactive accounts with a zero balance aren't displaying a tendency to handle existing debts.)

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You need to display at least one year of positive credit habits to be taken seriously, especially by a mortgage company. Start now, or you will always be a year or two from a good credit standing.

© Copyright 2001,2004, 2005 by Kristy Welsh