On a weekly basis I consult dozens of people regarding their low credit scores. One of the topics of discussion are credit cards.
Credit card accounts are the most versatile accounts you can have on your credit report. They have a component to them that drives your credit scores more than a mortgage or auto loan. This is your “utilization” or your balance in relation to your credit limit. If you carry a balance on your credit cards, it can lower your credit scores. Your auto loans or mortgage loans are installment accounts that you can’t increase your balance like a credit card (revolving account).
If I see that they aren’t using credit cards I recommend opening a couple to add in some positive credit. I often hear “I don’t like credit cards, I don’t like going into debt”. Most people associate credit cards with debt, because they don’t use credit cards as they were initially designed, to use and pay off monthly.
One of the most popular Rapid Rescores we do are for credit card balance updates. We submit the request to the credit bureaus and in 5-7 business days the balances are updated. Once this is done it increases your credit scores. I’ve witnessed credit score increases of 40, 60, even 80+ points by paying down credit card balances.
Credit card accounts are the easiest types of credit to obtain. If you’re having trouble finding a good credit card with low credit scores, I’d start with Open Sky Secured Visa . This is a low APR, low annual fee card. This credit card is available to anyone with a checking account. They don’t pull credit to approve you, so there’s no “hard inquiry” into your credit report.
For more information about how to raise your credit score, feel free to contact me direct.
President and Certified Credit Expert
Your credit card balances compose 30% of your FICO credit score.
When you are not using credit cards, you aren’t tapping into the most versatile credit accounts you can have on your credit report.