How to Establish or Improve Your Credit Score

If you’re just starting out, or experienced an unforeseen hardship which damaged your credit score, there are steps you can take to repair or establish credit. Depending on where you stand will determine how to begin.

If you’re young or someone who never used any type of credit try applying for store credit card. Many of the major department stores, such as Kohl’s and TJ Maxx, will approve a small line of credit with little or no credit history as long as you have income proof. You can also ask someone with established credit to co-sign the application if necessary.

Once you are approved make at least one purchase per month and pay the bill on time. If you make payments for a year you may qualify for an increase in your credit line. This doesn’t mean you should start spending more. Your debt to credit ratio is a factor in calculating your score. If you keep your debt 30 percent or lower than your available credit, your score will gradually increase. Gas cards are another credit line fairly easy to get. Again, if you have no credit history or a score below 580 you may need a co-signer to get approved. If you have no established history at all, generally your beginning score will be around 300.

If you are 18 years or older and have proof of income, there are a variety of secured credit cards designed to help people establish credit on their own. Check out the OpenSky ® Secured Visa card. There is no credit check so virtually anyone over 18 can get approved. You’ll need to deposit $200 to qualify and pay a $35 annual fee. If you use the card and make your payments on time, it’s an easy way to get started on establishing or improving credit. Basically, it works like a debit card so if you charge a purchase, you’ll need to replenish the security deposit – which is your credit limit for transactions. The difference is, unlike a debit card, your payments will count towards your credit score.

Capital One ® offers their Quicksilver One ® card to those with limited or fair credit history. It also charges a $39 annual fee but offers 1.5% cash back rewards on all purchases. The interest is fairly high, so you’ll want to make your payments on time and keep the balance low. The purpose is to establish credit, not go on a shopping spree. If you make one or two purchases a month and pay the balance when the bill comes, you won’t pay any interest on those purchases and will also show you are a responsible credit risk. Following this basic guideline will eventually increase your score, but it doesn’t happen overnight. It takes patience and discipline.