Improve your credit scores by establishing new credit! Positive credit can have powerful benefits to your credit scores. It adds positive payment history and lowers your Debt Ratio’s. These 2 factors can help you see tremendous improvement in your scores.
Use Credit Cards when establishing credit to improve your credit. Revolving accounts have an instant impact on your scores. An installment loan (car loan, personal loan, mortgage, etc) has set monthly payments. Your credit score looks at that payment history to determine the risk. If it is a new account, then there is no history to show you are making your payments. It raising your risk with the credit scoring models and can lower your scores until you have consistent payment history.
Credit Cards are the ideal tool to establish credit. Credit Scores look at your credit card balances as well as the payment history. Keeping a low balance can help improve your scores faster than installment loans.
When dealing with credit issues when applying for a credit card, you may not get approved. Secured credit cards are a good option while you are working on your credit scores. They may not be the ideal terms or conditions, but they are a tool that can be valuable.