How to Add Good Credit to My Report

Whether you have no credit or bad credit, adding good credit to your credit report is a fairly simple task that requires diligence and patience. Good credit reports aren't built overnight; it can take several years to build credit by showing your creditors that you are responsible and take your credit report and finances seriously. Either way, your credit report is an important part of your financial integrity and will remain with you for the duration of your life. Use credit carefully and don't overspend, and you will be rewarded with a good credit score that will allow you to take advantage of lower interest rates and better deals.

Instructions

1

Pay off existing debt, if you have it. The easiest way to raise your credit score and add good credit to your report is to pay off any credit card or loan debt that you may already have. The first step to adding good credit is removing bad credit, if it is possible.

If you have collections accounts that have been written off, contact the creditor and offer to pay small amounts if you can't pay it all. Any amount you pay is better than nothing; the worst thing you can do with a delinquent account is not pay anything at all. Contact creditors and offer them a settlement---you may be surprised to find out that many creditors are willing to take less than you owe if you offer it to them. In exchange, ask the creditor to remove the collection from your credit report completely once you pay the settlement amount.

If your accounts aren't past-due, make a plan to pay off the debt. Don't use the credit cards when you're in the process of paying them off. It might be tempting, but this will hamper your efforts to better your credit and delay paying the cards off.

2

Use your cards responsibly. Once you've paid off your credit accounts, start anew by using your cards only for purchases in which you've set aside the money to pay the entire card balance when the bill comes. Items like gasoline or groceries make good charge options when trying to add good credit because they are necessary purchases that would have otherwise been paid for in cash. Also, limit card usage to one or two accounts, as multiple credit card accounts can be difficult to manage.

If you don't have a credit card, sign up for one and follow the same procedure. Folks with no credit can often find cards that are tailored specifically for people with little or no credit history. Ask your bank if it offers a card for customers with limited credit history---most larger chain banks do. The credit limit on your first card is likely to be low and will let you build a good payment history that will add good credit to your report.

3

Take out a small personal loan and make good payments on it. Personal loans provided by banks are usually unsecured and give consumers a chance to add good credit to their reports by simply paying the bill on time each month. It may take several months for you to become eligible to receive a personal loan, because personal loans require a bit more credit scrutiny than other types of credit accounts. Paying credit card bills on time and paying off outstanding credit debt will likely make you eligible for a personal loan after 6 to 12 months, provided that there are no other negative factors on your credit report. Keep the loan amount small so that it can be repaid in a short period of time, such as 1 or 2 years.

4

Get a secured credit card. If you find that you aren't eligible for personal loans or cannot find a credit card for your credit type, secured cards might be a good option for you.

Secured credit cards have a credit limit that is usually equal to the security deposit that you pay the bank for receiving the credit card---usually $300 to $10,000 or more. The security deposit you give to the bank is placed in a savings account that gains interest over time, increasing the amount in the account each month.

Use the card like any other credit card---responsibly---and pay it off at the end of each month. If you can maintain a good payment history on the card, some creditors will allow the card to become unsecured over time.

5

"Piggyback" on a family member's good credit. This process involves your becoming a co-signer on someone else's credit card or loan accounts. This person should have good credit and pay his bills on time each month. While his good credit can "rub off" on your credit report, his bad credit can too---so choose wisely.

A parent or spouse may allow you to co-sign on an account so that her payments will also show up on your credit, adding good credit to your report.