Credit Repair

Secured Credit Cards

A secured credit card is a way to construct a credit history or undergo credit repair without any of the risks associated with borrowing a sum of money. A secured credit card requires a deposited sum of money as collateral and works as a line of credit. Most secured credit cards require at least a $200 deposit and, depending on the lender, there might be an annual fee.

It is crucial to pay off any outstanding payments on time because secured credit cards have a high-purchase annual percentage rate on overdue amounts. A secured credit card works just like a debit card and you should only make purchases you know you have adequate funds to deposit for.

Student Credit Cards

Student Credit Cards are designed for college-level students over the age of 18. You’ve required a minimum credit score in order to apply for a student credit card, and all its requirements are designed with the student in mind. With low annual percentage rates and competitive rewards programs, all these cards are a great way to build credit if you are just starting out or for credit repair.

Store Credit Cards

Store Credit Cards are an alternative that few businesses offer to finance in-store purchases and also usual (general) purchases. Store credit cards usually have a low (or no) credit score requirement, making them a huge alternative for someone starting out without any credit or for credit repair. Furthermore, store credit cards are best used for groceries in a place where you shop frequently for essentials.

A cosigner can be used whenever applying for a credit card if you don’t have sufficient funds, are under the age of 21, or don’t have a credit history of your own standing. The cosigner acts as a responsible party vouching that they are accountable for paying the debt if ever the main credit cardholder defaults on any payments when they are due to the lender. Ask your parents (or guardian) if they’re comfortable with being your credit card cosigner. This can be used in credit repair too.

Credit Card companies allow and enable the primary card owner to have authorized users under the same account. An authorized user isn’t accountable for paying debts (or fees) but can make payment with the card. As an authorized user, your name will start to show up on the credit history of the particular credit card account and, in turn, you will start building credit or undergo credit repair. Since an authorized user isn’t fully accountable for repaying debts, it’d help to ask a parent or guardian if you could be listed as an authorized user. Further, becoming an authorized user would give you a standing because it’d list you in the credit bureau. But that’s minor, so with that alone you might not build enough of a credit history noteworthy of aggregating a credit score.

Credit Builder Loans are designed particularly for new lenders in mind and are a methodology for establishing a very positive lending history. Banks, self-lending companies, and credit unions offer small loans of around $1,000 as a way of establishing credit. These are short-term loans of 6 to 12 months. During the term of your loan, you are required to make timely payments to receive a positive credit score.

Any loan would count towards your credit score, so if you are planning on making a huge purchase (or expense) then you could negotiate a loan. If you’re starting without any credit or undergoing credit repair, then a lender might ask you for collateral or a loan cosigner. Getting a cosigner is standard for student and car loans as they are ‘typically’ a massive investment. Student loans might have a payback period of more than 10 years and would start building credit for you when you begin to pay off the loan. Car loans have a much shorter payback period and typically begin to show up quicker on your credit score. Be sure to make your payments on time and in full. This is the actual key to building up a great credit score.

Always paying off your credit has a positive impact on your credit score because it would keep your entire credit utilization low and assists you in staying ahead of large debts without ever needing credit repair. The more total payments you have, the better to calculate your entire credit score from. Further, paying your bills much more frequently is a longer-term investment and would have a positive impact on your credit score for months instead of weeks.

Staying up to date with your card payments has the most influence on improving your credit score over time. Payment history is the top-most weighted metric in your FICO score and weighs heavily in your overall credit. If you struggle to make your payments in full, making the minimum payments would never negatively impact your credit score so you won’t ever need credit repair.

Paying back any outstanding debt serves as credit repair because it will always have a positive on your credit score. Paying your debt off earlier than expected and paying off debt later than expected would both negatively impact your entire credit score. The credit companies incentivize when you stick to your financial plan and place a positive credit score on repaying your debts on time. Paying back debts before (or after) the due date is a sign of discombobulation that tells you that the borrower should have taken out credit with a different timeline.

Closing out old and unused credit cards isn’t ideal for credit repair because it could negatively impact your credit by raising your credit utilization and shortening your lending history. Further, if your credit card has any required fees (or minimum usages), you should still close the account despite its effect on your credit score.

Credit utilization is the percent of funds you generally borrow, compared to your total credit limit. Your average credit utilization is a vital factor of your credit score, as it determines if your spending habits on the card are close to your total limit. A Perfect credit utilization is 30% or under, which is low for numerous, beginning with a brand new credit card. It’s crucial to keep your credit utilization low because periodically hitting your limit would negatively impact your credit score.

If you find yourself nearing your credit limit between every payment, you should ask your credit card provider to raise your limit. Whenever you reach out to your credit card provider to raise your credit limit, just ensure that first, you have already paid off any balances (or bills) due on that card. Credit card companies will look into your account before deciding on raising your credit limit and could deny a request if you have frequently missed any payments, outstanding balances, or frequently pay only the minimum balance.

Negative credit entries such as reporting mistakes, late payment charges, hard inquiries, and delinquencies could all be removed from your credit in credit repair, given a few stipulations. Furthermore, removing any negative credit entry is one of the fastest credit repair ways to improve your credit score, as updates are usually handled in the 30-day period in which the credit reporting agencies are updated.

Payment history is the most crucial value that carries a 35% weight in your gross credit score. Payment history would have a positive impact on your credit score if you make your payments on time and in full. Further, payment history would have a negative impact on your credit score if you are late, ever carry over balances, or are default with payments.

Your total amount owed accounts for 30% of how your credit score is calculated and contains both good and bad debt. Good debt is actually allowances that you are paying off and paying down over time. Just because you have an outstanding debt does not mean you would have a negative score. Further, bad debt in the case of amounts owed would be outstanding credits you aren’t paying off the minimum payments on.

How long you’ve been listed as a borrower accounts for 15% of your gross credit score. The length of your credit history adds much more conviction to your gross credit score as it’s more likely that you will continue if you have established a past good relationship and behavior with lenders. Similarly, a long-lasting bad credit history will have a negative effect on your credit score and this factor could end up notably lowering your score.

Your latest transactions account for 10% of your overall credit score and are weighed higher than your gross transactions. Numerous credit score raising hacks, such as taking out another credit card (or loan), could cause your credit score to rise, but the benefits are short-term. Additionally, new credit transactions are constantly revolving and are updated within 30-day cycles.

Your Credit Mix is the assortment of your gross credit (or lending history) and accounts for 10% of your gross score. Your credit mix is scored by the number of various kinds of credit you have outstanding and used during the past. Car Loans, Student Loans, Mortgages, Credit Cards, and any other formal lending would add to this score.