Last month, I went over some helpful tips to establishing your credit, as a new person to the game. This month, I would like to go over how to continue increasing your credit score. If you did not read the previous entry, you can find it here. 

To briefly go over what was discussed before, if you are new to establishing credit, a good way to go about it, is to start by getting yourself a credit card!  Once you have your card, start using it for your mundane purchases. Such as, grocery shopping and things like that. Ideally, you want to be spending money from your credit card, that you already have access to in your own personal banking account. Then pay off that balance right away with the funds from your bank account. This, in turn will eventually strengthen your credit score. This is because you should be receiving high points, for the biggest hitting categories. Those categories are payment history and utilization. These two categories take up 65% of your overall credit score! 

Now that we are all caught up, how can we continue to strengthen our score, in regards to applying for a car loan, or a mortgage, for example?  To start, you will want to be working at the same job for at least a few years. The years you have working at your current employment does not so much effect your credit score, but it does play a factor in the decision-making process of if a lender is willing to lend.

Now that you’ve had some practice in using your one credit card to build your score, it’s now time to tweak your strategy a little bit.  It is time to get yourself another credit card! When your credit is being pulled, to see if you qualify for products, it is important to have at least two trade lines, with one of them being a major player. For example, two major credit cards should do the trick. Like Visa, and Mastercard. 

Now that you have two credit cards, you want to apply the same principal you did with the first card, to both. However, here is where the tweak will come in. Instead of paying off the cards right away, after using them to make a purchase. What you will do first is run up at least 30% of each card. Sounds fun right! You’ve earned it at this point, time to go spending!  So, for example, if your card has a balance of $500, then you will not want to go passed the available balance of $350. You only want to spend $150 of that $500 balance, this is 30%. Once both cards are at 30% of the balance, just continue to maintain good payment history. Be sure to make your minimum payment every month, and on time! This is key, to building good credit. This cannot be stressed enough. Be sure to make your monthly payments and make them on time! Other than that, just make sure your cards do not go over 30% of the balance, and you are sitting pretty!

This, in combination with your working history, will help you secure that car loan, or mortgage in the future!  Again, I hope that this can serve as a great tip for young adults trying to establish credit.

“But Kris, I’m not a young adult trying to establish credit. I am wanting to re-establish my credit!”. I hear you! Have you endured some rough times, which is putting your credit score lower than what you would like? Unable to get approved by the banks? This happens more often than you think. Which is why I am originally posting these blogs targeting young adults. So that they would have an easier time navigating credit, than we did. But do not worry, hope is not lost for us either! If you are trying to repair your credit, try getting yourself a Capital One credit card. Capital One can in most cases offer credit cards for those who are primarily looking to re-establish their credit. Once you have your Capital One card, just apply the same principals mentioned above. Keep your balance at around 30%, and make sure to pay your monthly payments. This should help with re-establishing your credit. 

Capital One Credit Cards for Establishing and Repairing Credit 

Published by Kristopher Reaves