How to Build Low Credit

Low credit can affect various areas of your personal finances from buying a car to getting auto insurance. Some people live with low credit and deal with the consequences. But if you're tired of rejections or higher rates due to bad credit, consider effective methods to improve your credit.

Instructions

1

Borrow only what you can afford to pay. Taking out a number of loans or excessive credit card use can negatively affect your ability to keep up with payments, and missing payments triggers negative information on your credit score. Know your financial limitations and save up for purchases instead of applying for loans or credit accounts.

2

Eliminate balances to build credit. A high debt ratio can trigger a low credit score. Boost your personal score by paying down credit card balances and other loans in your name. Voluntarily increase your minimums to pay down a higher percentage of the principal each month.

3

Acquire more than one credit account. While it's important to exercise care when applying for new loans or credit, having too few accounts is an acceptable reason to submit an application. The types of accounts you manage does affect scoring, and it's imperative to have a mixture of accounts.

4

Keep accounts active. Inactive credit cards can stall your credit score because creditors may cease reporting the account to the bureaus. Rotate your cards to keep them active. Charge something inexpensive and then pay off the balance in full to avoid debt.

5

Remove negative items from your credit report. Because negative items on reports stay for seven years, it's best to avoid collection accounts and charge offs. But if these items do appear on your report, attempt early removal by paying off these old debts, and then asking lenders or creditors to remove the item.