MyCredit Matters

Having a good credit history and credit score is extremely important. Not only will it qualify you to receive credit cards, but also home, car, and student loans.

Credit scores are used to determine insurance rates and even whether you need to make a deposit to receive utility services.

The problem that many people face with a limited or poor credit history is that they cannot receive the credit necessary to build or rebuild their credit history. Thankfully, there are a few ways to avoid this paradox:

Secured Cards

Secured cards are like regular credit cards in almost every way, except that applicants need to place a deposit on their account before receiving their card. This deposit may be equal to their credit limit, but some secured card issuers will allow cardholders to charge beyond the amount of the security deposit.Otherwise, cardholders will have to pay monthly bills and can incur interest, just like any other credit card holder. These card issuers will report the cardholder’s payment history to the majorcredit bureaus, which can help boost their creditscore.

Applicants looking for a secured card need to be very careful to avoid all of the inferior products marketed to this segment. The best cards will be issued by a major bank and have a grace period so that interest charges are waived when the entire balance is paid in full.Another feature to look for is the willingness of the card issuer to offer an unsecured card after a year of timely payments.

Become Authorized on Someone Else's Account

Another way that people can improve their credit scores and credit histories is to become an authorized user on the account of a person with an excellent payment record. In this way, the other person’s account will be reported on their credit history.Given future on-time payments, this account will appear on the authorized cardholder’s credit history and will be reflected in their credit score. Choose a cardholder that has no late history in the past 24 months and has not used over 30% of their total limit.

Receive a Store Charge Card

Secured cards are the easiest to get with poor or new credit history. Just behind are store charge cards.

These cards, which are only valid at the store that issues them, are often granted to people with limited credit history. Cardholders might have a very small line of credit, but it can be a valuable tool to build credit history.

What Not to Do to Improve a Credit Score

People looking to build their credit history should not look to prepaid cards or debit cards to do so. These cards are important methods of payment that can never incur debt, but their use will not be reported to credit agencies.

It can be very hard to build or rebuild a credit history, but it’s important to do so. By utilizing all of these tips and tricks, credit card users can improve their credit scores quickly.