When you start to repair your credit & cleaning all the negative blemishes on your credit report, it’s even more imperative to remember to focus on adding positive credit history simultaneously. If you don’t have any, then it’s definitely time to create them! All aspects of your credit history are taken into consideration when crunching those final three digits that make up your credit score. Lenders use your credit score to determine how much of a risk you are, which determines your approval or denial. There are a multitude of underutilized credit enhancing secrets that if used correctly, add positive entries to your report and score.

• Apply For New Credit Lines: The only way that a creditor knows that you are sensible with credit is if you actually use credit responsibly. If your prior record has little to no positive activity then it’s that much more difficult to convince a lender you are credit worthy. Therefore those without should start with a low limit revolving credit card. Open up a credit card account, use the card responsibly by never spending more than 30% of the total credit limit and paying your monthly payments promptly.  If you are not eligible for a traditional credit card, open a secured credit card, it has the same amount of credit improving potential as any other type of credit card.

• Manage Your Credit: It is vital that you open credit cards when you are able to make timely payments. The whole idea of opening credit is not only to build your credit history but also to show that you are responsible and make timely payments. In addition to making payments on time, you must also recognize one of the most important concepts in credit: the debt to balance ratio. Your debt to credit ratio is dependent on the percentage of your total available credit vs. your total debt amount and has significant influence on your credit rating. There are five levels to keep in mind when it comes to your balance: 20% 40% 60% 80% and 100% usage. You never even want to consider coming close to using 100% of your balance. It shows your lender and the credit bureaus that you do not have much cash, you are in a cash crunch and may not be a good risk in the future. Using up to 45% of your balance has a neutral effect on your credit score, doesn’t impact your credit score while the lower levels improve it. Using less than 30% demonstrates responsible spending habits and raises your credit score. The higher percentages have a severely negative impact on your credit score, and hitting those higher percentage levels can drop your score by as much as 100 points!. Use your credit cards but in a very strategic and calculated manner.  Using your credit cards responsibly will insure that your credit score will be on it’s way up in no time.

• Get The Right Kind of Credit: Opening new lines of credit is important in building credit and raising your score, but know that all credit is not the same. There are different types of credit and the impact of each on your score can vary tremendously. Store credit cards for example do not have the same credit improving potential as other cards, and can even harm your credit when your profile is loopsided with too many of these type credit lines. It is best that you stick with major name credit cards: Discover, Visa, Mastercard, AMEX etc. Auto loans also do not carry the same credit improving potential as revolving credit cards. Remember that credit card debt is known as revolving debt and is one of the best credit repair strategies used to raise scores quickly. It is constantly updated with monthly payments. Monthly payments and balance statuses show if you are being financially responsible or in danger of going into default.

Use these credit repair and credit building strategies wisely and you will quickly see the results of your labor. If you are having trouble understanding any part of the process, dig deeper into the subject and arm yourself with more knowledge. Your credit rating is one of the most essential aspects of your overall financial well being, so it’s surely worth the time and effort to properly position yourself and increase your score.

Technorati Tags: Credit, credit cards, credit rating, credit repair, credit restoration, credit score

Tags: Credit, credit cards, credit rating, credit repair, credit restoration, credit score

This entry was posted on Friday, September 25th, 2009 at 6:37 pm and is filed under Credit. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.