Rebuilding Credit – Re-Establishing Your Credit

Rebuilding Credit Isn’t So Easy

A crucial part of credit repair is rebuilding your credit history. Rebuilding your credit involves adding positive payment history to your credit report. The more positive payment history you have, the better your credit will be. But, when you’re rebuilding credit, there are some things you have to watch out for. Call us for credit cards that offer guaranteed approvals at 800-605-9085.

Watchout For Store Credit Cards

Store credit cards are often the easiest types of credit cards to get, especially when you have a tarnished credit history. When the store clerk offers to sign you up for their credit card, your mind quickly thinks to the positive impact the credit card will have on your credit score, but that might not be the case. Store credit cards often have low credit limits, so low that you only have a little available credit left after making your purchase. When your credit card balances are high relative to your credit limit, you have a high credit utilization. Credit utilization is 30% of your credit score and your credit limit takes a hit.

Not only does the high balance have a negative effect on your credit score, so does the new credit card. Credit inquiries are placed on your credit report each time you make a credit card application. These inquiries count 10% of your credit score. The more inquiries, the more your credit score will be hurt. The new card will also lower your average credit age which is 15% of your credit score.

FICO, the company who calculates the widely-used FICO score, doesn’t place much emphasis on store credit cards because the cards area associated with future default. So, the store credit card you just opened won’t do much good in the way of rebuilding your credit history.

The Best Credit Card for Rebuilding Credit

If you want to start rebuilding your credit, the best option is to get a major credit card from an issuer like VISA, MasterCard, Discover, or American Express. These credit cars are given more weight in the FICO scoring calculation and will go a lot further in helping you rebuild your credit score than store cards.

Major credit cards can be difficult to get, especially when you have a bad credit history following you around. You have a couple of options for getting one of these credit cards on your side.

First, you might get a friend or family member to add you as an authorized user on one of their credit cards. This account history would get included on your credit report and aid in rebuilding your credit.

The second option is to get a secured credit card. Though secured credit cards require a deposit to be made to secure the credit limit, you can often covert to an unsecured credit card after a few years of timely payments.

The best and third option is to apply with  unsecured lines of credit. Give us a call so we can set you up at 800-605-9085.

How Your Credit Scores Are Calculated

Let’s take a look what makes up your credit score and what You can do to directly impact Your Credit Scores!

What’s in your FICO® score

FICO Scores are calculated from a lot of different credit data in your credit report.

These percentages are based on the importance of the five categories for the general population. For particular groups – for example, people who have not been using credit long – the importance of these categories may be somewhat different.

Payment History
• Account payment information on specific types of accounts (credit cards, retail accounts, installment loans, finance company accounts, mortgage, etc.)
• Presence of adverse public records (bankruptcy, judgements, suits, liens, wage attachments, etc.), collection items, and/or delinquency (past due items)
• Severity of delinquency (how long past due)
• Amount past due on delinquent accounts or collection items
• Time since (recency of) past due items (delinquency), adverse public records (if any), or collection items (if any)
• Number of past due items on file
• Number of accounts paid as agreed

Amounts Owed
• Amount owing on accounts
• Amount owing on specific types of accounts
• Lack of a specific type of balance, in some cases
• Number of accounts with balances
• Proportion of credit lines used (proportion of balances to total credit
limits on certain types of revolving accounts)
• Proportion of installment loan amounts still owing (proportion of balance to original loan amount on certain types of installment loans)

Length of Credit History
• Time since accounts opened
• Time since accounts opened, by specific type of account
• Time since account activity

New Credit
• Number of recently opened accounts, and proportion of accounts that are recently opened, by type of account
• Number of recent credit inquiries
• Time since recent account opening(s), by type of account
• Time since credit inquiry(s)
• Re-establishment of positive credit history following past payment problems

Types of Credit Used
• Number of (presence, prevalence, and recent information on) various types of accounts (credit cards, retail accounts, installment loans, mortgage, consumer finance accounts, etc.)

Please note that:
• A FICO score takes into consideration all these categories of information, not just one or two.
No one piece of information or factor alone will determine your score.
• The importance of any factor depends on the overall information in your credit report.

For some people, a given factor may be more important than for someone else with a different credit history. In addition, as the information in your credit report changes, so does the importance of any factor in determining your FICO score. Thus, it’s impossible to say exactly how important any single factor is in determining your score – even the levels of importance shown here are for the general population, and will be different for different credit profiles. What’s important is the mix of information, which varies from person to person, and for any one person over time.
• Your FICO score only looks at information in your credit report.

However, lenders look at many things when making a credit decision including your income, how long you have worked at your present job and the kind of credit you are requesting.
• Your score considers both positive and negative information in your credit report.

Late payments will lower your score,

Source: Fair Isaac Corporation, ” What’s in your FICO® score”

In the United States credit is part of life and it’s very important to know how to establish, reestablish, and or repair your credit. And once we have it, protect it. At www.AttractiveCreditSecrets.com they show you the ins and outs about credit repair and restoration they never taught you in school or anywhere else. For a limited time only we are offering a FREE credit e-course to get you started.

And at Attractive Credit Cards, they are offering an unsecured revolving credit card with high credit limits up $10,000. They report to the major credit bureaus and get you on your way to getting the credit scores you deserve to build a solid and reputable credit profile.

As with all credit cards and loans, financial responsibility relies on YOU. Developing responsible spending habits and timely repayment schedules are an essential part of establishing and maintaining rock solid credit scores.