subject: Improve Your Credit Score By Using Credit [print this page] The caption of this article may seem dubious, but you may well build up your credit score by using a credit card in the specific way discussed in this article. You need a good credit score if you wish to get any loans or credit applications approved quickly, and pay minimum interest rates on them. That's why you should do what you can to get a decent credit score.
You need to show the credit reporting agencies that you are good with credit, and have an excellent payment history (your payment history accounts for 35% of your credit score) and the best way to show them this is to start using some form of credit and make the payments by the due date each month. The simplest way to do this is to get a credit card or store card and start using it. You will need to actively use it for a minimum of 6 months. After using it for this time period your good payment history can have an effect on your credit score.
A simple way to start the process is to get a store card or credit card with a small limit. Don't make it too high; around $500 is a good place to start. If you'd prefer, you could apply for a secured credit card. What happens here is that you leave a deposit with the bank for the amount you wish to have as the credit limit on your card. If you want a $500 credit limit, then you deposit $500 as collateral against the credit card and this is kept by the bank. You then have the use of the credit card to be used exactly the same a regular type of credit card, including making the repayments by the due date.
The way to use the card is to charge something that is affordable for you to the cared, then pay back by that balance by the due date of the statement. So instead of paying cash for an item, you would use the credit card to pay for it, and then use the cash you would have used to pay for the item as the repayment on the credit card. This must be paid by the due date on the statement. This regular using and repaying of your credit card establishes the good payment history you're after.
Please don't be foolish and go on a spending binge with this credit card and get yourself into debt. That is not the reason for getting the card. You want to establish a good repayment history which will positively affect your credit score, so keep the items you charge within your budget so the credit card can be repaid in full each month. By using the card in this manner you will achieve your aim of an improved credit score.
