There’s a lot of way to build credit score, or to improve your credit! for person that have no credit history, they best way you can do, is by getting secured Credit Cards! because that’s the easiest way you can do! this is good for college student or person that never make loan or debt with financial company! but if you already have credit history, though your credit are not good, and always make mistakes such as, not pay on time, too many cards, debt utilization exceed more than 80% and etc(bad Credit), you can try with credit card company that not requiring good credit!
some company will accept standard score or even poor credit! but most of these company most likely will have high fee, with small credit line! so basically poor credit are not beneficial at all, in fact if you compare people that have no credit history are better than people that have poor credit! because obviously people that have bad credit have problems dealing with his own debt! and for company it’s like high risk business!
If I were you I will choose, secured credit cards, and start over! basically credit score can be improve after times! what you should need do is try not to doing the same mistakes! and if you can manage this behavior in 6 month or 1 years your score will improve! here’s what you should pay attention about credit score!
First is, your Payment history! this is important! most credit score system will put a heavy weight on this(35% from total scores!)! because pay on time mean low risk business! but paying late! are bad business! because when you borrow money, it mean you have debt! and loans mean trust! so if you still get loans, mean someone still trust on you! but it will ended if you always late to make payment! and no one will ever trust you again, and risking their money to give you a loans! so change your attitude, and always pay on time!(easy to say than done)
Secondly is, Amounts Owed! most company will seriously pay attention on this! because if you owed to many different company and the amount are too big for you to pay! and beyond your capacity to pay off! the chances is, your credit score will be negative! debt utilization must not exceed more than 80% before grace period ended! it mean you can make max out your credit limits, though before grace period ended, your debt utilization must not more than 80%! it could be pay a half of your debt, before 25 days, or pay off your total debt before grace period end! if you can maintain credit utilization not more than 80% for 12 month! the chances is your credit score will increase very high! (this is tricky 😉 but if you can repeat this a few times, you will see something interesting! )
Third is, Credit Length! how long your credit history are ? 1 years with good record! or 2 years with decent records ? this factor are important! because for business POV, when we do business with old costumers! most of the time, they already make profit from you! so it’s wise to give a chance and priority to them, rather than dealing with new and unknown people! so it’s naturally if many credit cards company will put decent weight on this factor!
Fourth is, Credit Mix! this also have influence for your credit! because if you always pay on time, and have good debt management, and not only for credit cards, but also for auto loans, home loans and etc! they see you as good people that can handle debt wisely and not just pay credit cards bills on time! in mean you are genuine and capable to handle debt!
last is, New Credit ! it mean how many card that you apply in short period of time! if you apply 10 or more credit cards per month, their system will give you negative score since you apply to many company! because the question is why you apply to a lot of company ? for them, it could be a red flag! because honest people will not apply to many different cards! because we all know human can’t handle to much credit cards! and normally 1 person only have 1-3 credit cards in a years! so if you apply 5 cards every single month! I am sure you have something in your mind! 😎
5 factor above basically I get from FICO score! but I do believe that their system score calculation are already solid, and reasonable! and I am sure most company will think the same way! because obviously FICO are score system that most credit company will use to make assessment! so if I were you, I will pay attention to those 5 important factor! because for sure, it will improve your credit!
and If you want to improve your credit fast! the most logic you can do is by focus on these 3 factor! Payment History! you should pay off your debt in short time! or if you can before grace period ended! so no interest rate and still get good score! secondly focus on Amounts owed! it mean you can max out your credit utilization! but before grace period end, you must pay at least a half! the idea is to make your credit utilization not exceed more than 80%! and if you can pay off your debt fast! last is credit mix! pay attention on other bills that you owed! something like auto loans, home loan personal loans and etc! make sure you not late to pay, and maintain your debt utilization same like credit cards ! the real last one is! don’t apply another new cards! because if you not apply new cards, your score will not decrease! just focus on what you have!