Improve Your Credit Score By Using Credit

The heading sounds incredulous, but you may be able to improve your credit score by means of a credit card used in a particular way. A good credit score is a necessity if you want to get approval on loan or credit card applications, and enjoy the benefits of paying a low interest rate on them. For these reasons it’s important to ensure you possess an excellent 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 good way to start is to get yourself a credit card or a store card with a capped credit amount of say $500. If you are concerned about getting approved for one, you could obtain a secured credit card. You leave a set amount of money as a deposit with the bank, say $500, and that is used as collateral against the credit card. So the bank has the money in case repayments are not met. You treat this card just like an ordinary credit card including repaying the amount owed by the due date.

You then start using the card for smallish purchases that you can easily pay back with a month – by the due date printed on the monthly statement. The best way to use it is each month pay for something that you can afford with your credit card. Then pay the cash you would have used to pay for the item back to your credit card by the date it is due. In this way you are regularly using the credit card and paying it back on time each month. This is what will build a good payment history for you.

Don’t go silly and overspend on this credit card. You’ll just negate the reason for getting it in the first place; which is to show a good payment history and so improve your credit score. Just use it to make smallish purchases that you can easily pay back each month.

If you enjoyed this article then be sure to head over to fix my credit where you can find out the truth about credit repair forums.