Consumer credit often takes a beating during the holiday season. You can flip that script with a credit improvement step on each of the 12 days of Christmas.

It’s the perfect time to do it. Instead of dreading larger credit card balances and minimum payments following the holidays, how about using downtime from work to make your holiday debt more manageable?

Follow our 12 credit improvement steps one day at a time over the holidays.

1. Check your credit reports

Figuring out where you are starting from is key to being able to monitor progress. You can check your credit reports from Equifax, Experian and Transunion for free at AnnualCreditReport.com.

Your credit report shows the status of your credit accounts. This includes your balances and your payment history.

High balances and late payments generally hurt your credit score. Identify any problems you need to address. Also keep an eye out for any mistakes on your credit report. Getting these fixed could give your credit score an instant boost.

2. Sign up for credit monitoring

Sign up for free credit monitoring, including daily credit score updates. Think of this as an ongoing extension of checking your credit report. Credit monitoring lets you know when there has been any significant credit activity in your name.

This can be useful in helping you track your progress as you take additional steps to improve your credit. In addition, credit monitoring can alert you to any unusual activity that could be a sign of fraud.

3. Prioritize your credit card debt

If you have balances on more than one credit card, it pays to prioritize which balance to pay down fastest. Check each credit card statement to see what the current interest rate is. Then list all your cards in order of interest rate, from highest to lowest.

Make the minimum required payment on each card. Then, if you have extra money for payments, target the highest-interest card first. This has the biggest impact on reducing future interest charges, and that makes paying down your debt less expensive.

4. Negotiate a better rate on your high interest cards

Contact the credit card issuers of your highest-interest cards to see if you qualify for a lower rate.

Your chances of succeeding are best if you have a good payment history on that card and if your credit record is generally strong. It doesn’t cost anything to ask.

5. Shop for a cheaper credit card

If you can’t get a rate reduction on your high-interest credit cards, shop around to see if you could do better with a new credit card. Sign up as a Credit Sesame Member and see if you qualify for any cards under the Sesame Guarantee Program.

Remember that opening a new account could hurt your credit score a little so you should be reasonably certain of a successful application before applying. A new card could save you money on interest and reduce your credit utilization. This should help you improve your credit over time.

6. Consider credit card debt consolidation

While shopping for cheaper alternatives, you may see an opportunity to save money by transferring one or more existing balances to a less expensive card.

You might maximize those savings by using a zero-percent balance transfer card. This strategy works best if you:

• Have a plan for paying off the balance before the temporary zero-interest period expires
• Check to see if the interest you save exceeds any fees for transferring balances

7. Refinance long-term credit card debt into a loan

If your existing credit card balances are so high it might take more than a year to pay them off, consider refinancing some credit card debt into a personal loan.

Personal loans generally have lower interest rates than credit cards. They also give you a set schedule for paying off your debt.

If you use a personal loan to pay off credit card debt, make sure you don’t start building those balances up again. Any debt refinancing or consolidation should be part of a broader debt reduction program.

8. Make a monthly payment schedule

Create a schedule of payment due dates for your credit cards. Knowing when you must pay makes planning easier.

Even if you have automated payments for your credit cards, you must plan for those payments by making sure there’s enough money in your bank account to cover them. Also, planning payments helps you spot when you have excess funds and so an opportunity to pay more than the minimum payment. This reduces your outstanding debt faster.

9. Get balances down below 25% of your credit limit

One factor used to determine your credit score is the percentage of your credit limits that is currently in use.

Aim to get the amount of credit you use below 25% of your credit limit. There’s no magic to that number, but keeping a fairly low balance should help your credit score and help you make sure your balances aren’t creeping higher over time.

Once you get your credit usage below 25% you can shoot for paying off your balances completely. That is both the cheapest way to use credit and best for your credit score.

10. Apply for higher credit limits

One way to get your credit utilization rate down is to ask your credit card issuers to raise your credit limit.

The chances of a card issuer raising your limit are best if you have a good credit score and haven’t missed any payments on the card. According to data from the Federal Reserve Bank of New York, nearly two-thirds of applications for credit limit increases are approved.

Remember that a credit limit increase does nothing to reduce your interest charges. However, it can improve your credit score as long as you don’t proceed to build your balances up to the new limit.

11. Create a budget for the year

The best thing you can do for your credit score, in the long run, is to create a budget that doesn’t depend on continued borrowing.

There may be times, such as the holiday season, when it’s necessary to borrow money temporarily. However, having a budget for the full year helps you see how much you can afford to borrow and still pay off your balances within the year ahead.

12. Start setting aside money for the next holiday season

Even borrowing money temporarily costs something. The best way to pay for holiday shopping is with money you’ve saved up in advance.

As you get better at budgeting, plan on setting aside an amount each month to use towards next season’s holiday spending. This may even mean you can earn interest during the year instead of paying it.

That’s it for the 12 days of credit improvement

Credit improvement is not the most festive activity over the holiday period, but if you follow these tips, you might find that twelve days of credit improvement turns into twelve months of feeling merrier about your finances.

You may also be interested in:

• How Fast Can You Raise Your Credit Score?
• Focus on the Incentives for Improving Credit Score

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post 12 Days of Credit Improvement appeared first on Credit Sesame.

Start by remembering that even if you feel hopeless and helpless about your low credit score, you can become highly creditworthy. The process takes time and effort, despite ads you might see from scammers promising instant results. You have to be patient and determined to succeed. But that is pretty much the only qualification you need.

This guide outlines ways to build credit and develop good financial habits to keep a high score high.

Reasons your credit score is low

Ways to build credit

Secured credit cards

Using a secured credit card

terms and conditionsSesame Cash secured credit card

Credit-builder products

Credit builder loans

Sesame Cash Credit Builder

Use a co-signer for new loans or credit products

Become an authorized user on a credit card

Make sure bills are in your name

Make building credit a habit

Maintain credit habits during good times and bad

Sign up for Sesame Cash Credit Builder today

Reasons your credit score is low

There is usually one of three reasons why people find their credit score is lower than they would like. These are:

1. Having a “thin file.” They have not borrowed enough in recent years for lenders to know whether they are responsible borrowers. This is often a problem for the very young, who have never borrowed previously, or older people who have avoided borrowing as retirement approached
2. Damaging a previously better score. Perhaps they went through a period of sickness or unemployment or reduced earnings that stressed their finances to the point they could not keep up with debt payments
3. Never having had a good score. Some people are naturally bad money managers. It is not necessarily their fault because their brains may be wired differently from those who manage their personal finances well. Of course, this does not have to mean they cannot develop better habits

In all those situations, a low credit score today is no bar to a much better one in the future. Indeed, you might find it easier to raise a low score than a high one, simply because you have more levers to pull (more ways to build credit) than someone who already has excellent credit. Or, as credit-score technology company FICO puts it: “In general, the higher starting score, the longer it takes for the score to fully recover [from a hit].”

Ways to build credit

In 2020, Forbes magazine said:

It pays to have good credit. In fact, bumping your score from the “fair” range to the “very good” range could save you a whopping $41,000 on your mortgage (and thousands on student, car and personal loans, too).

And those are not the only savings. In some states, people with high scores can save $1,000+ yearly on their homeowners’ and auto insurance. Meanwhile, landlords often approve or deny tenants — and set their security deposits — based on credit scores.

Over your lifetime, a high score could save you tens of thousands of dollars, perhaps even hundreds of thousands. Read on to discover several proven ways to build credit.

Secured credit cards

Those with low credit scores generally find it hard to get approved for any sort of borrowing, including a mainstream credit card. This can put them in a Catch-22 position: They cannot get credit with a low score, and they cannot improve their score without credit.

A popular way out of this trap is a secured credit card. These are among the best ways to build credit from a low starting point and are available to almost everyone. That is because you are not borrowing any money. Instead, you deposit your own money and use the card for spending. So, in some ways, you can think of these as prepaid cards.

However, there are important differences between secured cards and prepaid ones. First, your card issuer reports your behavior as you manage your account to credit bureaus as if it were an ordinary credit card. That allows you to build your credit score — providing you do everything right.

And, secondly, you have to keep up with minimum monthly payments. Your “lender” will not touch your deposit unless you default. So, you must reduce or zero your balance each month as you would with a normal credit card.

Using a secured credit card

Doing everything right with a secured card mainly involves four things:

1. Funding the card regularly — You may wish to pay early because you never, ever want to be late
2. Keeping your balance low as a proportion of your “credit limit” (the amount you deposited) — If you want to build your score quickly, keep that balance below 10% of your limit. But, if you are in less of a hurry, keep it below 30%
3. Making at least the minimum payment — Again, if you want fast results, zero your balance each month
4. Not initially applying for more than one secured credit card — Live with one for several months before thinking of applying for a second

If you follow those rules for maybe six months, you may find that your score is rising. But it is likely to take longer to reach a point where mainstream lenders begin to welcome you. Still, eventually, you could trade in your secured card for a normal one.

Just beware of one thing. There are some bad players with rip-off fees in the secured cards market. So check online with sources like Trustpilot and the Better Business Bureau before you sign up. And be sure to read the small print in the contract before agreeing to anything.

Sesame Cash secured credit card

Of course, Credit Sesame is famous for providing ways to build credit. And we believe our Sesame Cash secured card, combined with our Credit Builder service, gives unbeatable help to those who want to build their scores. But, as with all financial products, you should comparison shop before you commit.

Sesame Cash offers online banking with effectively no fees:

1. Just two fees — $2.50 when you make an out-of-network ATM withdrawal and the same for an international ATM withdrawal. Seriously, that is it! Read the card’s fee schedule on its terms and conditions webpage
2. Government (FDIC) insurance on your deposits
3. Highly functional Mastercard®
4. Cashback rewards
5. Free mobile device protection
6. Two-day early payday

Visit the website for answers to your questions.

Credit-builder products

A credit-builder product should do what its name implies. It is a tool that helps you build your credit score.

Credit builder loans

Some companies offer secured “loans,” which they describe as “credit builder loans.” Here is how federal regulator the Consumer Financial Protection Bureau (CFPB) describes these:

“Financial institutions, typically credit unions, deposit a small “loan” (often $300-$1000) into a locked savings account, and then you pay the
institution back with small-dollar payments over 6 to 24 months. These payments are reported to the credit reporting companies. Once you come to the end of the loan term, you receive the accumulated money back in total.”

Sesame Cash Credit Builder

Some other companies offer a more fully featured credit builder service. Take Credit Sesame’s offering:

1. No credit checks
2. Shop with debit to build credit — Your debit account monthly payments are reported to the Big 3 credit bureaus as if they were made on a credit card
3. Daily access to your credit score
4. Cash rewards when you pass credit score milestones
5. Cashback on many purchases
6. No fees — Except for international and out-of-network cash withdrawals. Third-party and cash deposit fees may apply.
7. Seamless integration with the Sesame Cash card
8. Get recommendations of cards and loans for which you’re likely to be approved

Of course, we think that is an unbeatable offering. But we would say that, wouldn’t we? Once again, always shop around for your best deal before committing to a new financial product.

Use a co-signer for new loans or credit products

Many lenders who would deny an application from an uncreditworthy borrower are willing to approve the loan if a co-signer comes onboard. That allows you to have an account in your name and so can be one of the most effective ways to build credit.

A co-signer is someone with good credit who signs an agreement to guarantee your debt. Nothing is likely to go wrong for the lender, who now has two people to chase — including one creditworthy one who may have plenty of financial resources — if your loan goes bad.

But plenty can go wrong for the co-signer if you make late payments, default or skip town. That is because any bad behavior on your part will appear on their credit report as well as yours — and potentially drag down their score.

Perhaps worse, the lender can demand full payment of the debt if you default. And it is likely to target the co-signer — who probably has savings — before you when it comes to collect. On a large loan — perhaps a mortgage or car or student loan — that could have serious consequences.

All this means any person who agrees to co-sign your loan will have to love you a lot. And, if you love them back, you shouldn’t ask unless you’re confident you can manage that loan perfectly.

Become an authorized user on a credit account

A common question is, “Will my credit score go up if I become an authorized user?”

Some credit accounts, and especially those for credit cards, allow the cardholder to add an authorized user. This can be another of the more effective ways to build credit. Better yet, it reduces the risks to your friend or family member compared to being a co-signer.

It does not eliminate those risks entirely. Because you typically get a card in your name on someone else’s account. That means the person who is helping you has to trust you not to go rogue and run up huge charges that you cannot repay. However, nowadays, almost everyone can monitor their accounts online, so your friend or relation could quickly cancel your card, should the need arise.

According to card issuer Capital One, ” … credit card companies aren’t required to report authorized users’ activity to the three major credit bureaus.” So, you have to make sure that the one you’re going to use does make those reports. Otherwise, the whole credit-building exercise will fail.

Capital One continues: “But if the card issuer reports information, seeing positive effects on the authorized user’s credit starts with both the account holder and the authorized user using the credit card responsibly.”

Unfortunately, not all credit card companies allow authorized users at all. So, ask the person who is helping you to call his or her card issuer to make sure you can become an authorized user, and that your credit will benefit if you both decide to go ahead.

Make sure bills are in your name

Traditionally, credit bureaus (aka credit reporting agencies) only tracked your credit accounts. Therefore, payments on things like rent and utilities did not appear on your credit report, and so did not affect your credit score.

However, that has been changing in recent years. VantageScore, alongside FICO, is one of the two biggest builders of credit scoring technologies. And it explains:

There is a trend evolving which gives consumers some control over the credit reporting of nontraditional credit accounts. For example, Experian Boost is available to help you add your utility and mobile phone accounts to your Experian credit report. This is an example of what’s being called consumer controlled or permissioned data. You choose and control whether or not it’s added, and for how long it’s reported.

Many landlords are willing to report rent payments, too, upon request. For many people with scores below 675 or 700, this can be among the quickest and easiest ways to build credit. And it’s free. The person who wrote that VantageScore article reported, “I personally tried Experian Boost. I added my power and gas utilities to my Experian credit report. My score went up 5 points. It cost me a grand total of zero dollars. I’ll take it!”

Of course, such quick hits are just a start. And months and years of on-time payments on rent and utilities should continue to improve your credit score. But only if the accounts are in your name.

However, this is potentially a double-edged sword. Your score should climb nicely as long as you continue to make full and timely payments. But it should fall every time you are late, skip a month or make a part payment. So, be sure you are able to manage these accounts well before you ask for them to be reported to credit bureaus.

Make building credit a habit

We have provided several ways to build credit. However, none of them will work in the long term unless you get into good credit-building habits.

In the long run, your credit score is determined by how responsibly you manage money. And that score is influenced most by the following behaviors (in order of importance):

1. Pay all your bills on time. And make sure every payment is at least the minimum required that month
2. Keep your credit card balances low. Do not let a card’s balance exceed 30% of its credit limit. If you are trying to improve your score, keep those balances below 10%
3. Do not open or close credit accounts unnecessarily. It is OK to do so if you need to, but do not act on a whim
4. Never make multiple credit applications for new accounts over a short period. It makes you look desperate and raises red flags (and your score)
5. Monitor your credit report for errors. And keep an eye on your score to track your progress. Do not worry; using a credit score monitoring service does not affect your score. Only credit applications do

Everybody goes through bad patches. So, there may be times when you cannot follow all those rules as strictly as you would like. For example, you might have no choice but to skip a payment or run up your card balances if you fall sick, are unemployed for a while, or face reduced hours.

Maintain credit habits during good times and bad

Of course, it’s always wise to build an emergency fund during good times that can help tide you over during bad times. And setting up a household budget now could help you with that. However, many of us do not have the sorts of good times that leave spare money for saving.

Still, even then, there are ways you may be able to reduce the impact on your credit score of your unavoidable actions. Call your lenders early on in your difficulties, explain your position and ask if they can give you some leeway. While you’re calling, request that they do all they can to reduce the impact on your score of what is happening. They do not have to help you, but many will.

Sign up for Sesame Cash Credit Builder today

Of all the ways to build credit we have described, the Sesame Cash Credit Builder service is probably the most affordable (it is free), accessible and immediate.

And it is designed to help everyone: rich or poor, and those with high or low credit scores. Indeed, Credit Sesame does not check your score at all before approving you.

It is easy to sign up. Apply now if you are ready to take your first step to a better credit score.

Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

The post Ways to Build Credit and Create Good Credit Habits appeared first on Credit Sesame.

Introduction

If you’re trying to rebuild your credit, you’re not alone. As you’ll see from the data below, the percentage of people actively working to improve their credit score is increasing in many credit score ranges. In fact, a 40 percent of individuals with good credit scores say that they were working to improve their credit in 2018.

Percent of Americans Actively Working to Improve Their Credit Score

Actively trying to repair	Members	Non-Members
Poor Credit Score	9.45%	3.56%
Fair Credit Score	35.96%	17.44%
Good Credit Score	40.23%	25.9%
Very Good Credit Score	22.43%	10.63%
Excellent Credit Score	9.61%	4.75%

Source: Survey of 1000 members and non-members who have a credit score.

Why is this happening? We’ve all heard about the importance of our credit score. It is what lenders look at when deciding whether or not to extend you credit for things like mortgages, car loans, and credit cards. The better your score, the more favorable the interest rate you’re able to receive.

But, your credit score is also related to other life milestones like getting your first apartment and the amount of deposit you’ll be asked for, setting up the utilities for that apartment (and the deposits you’ll pay there, too), as well as getting a cell phone contract, car insurance, and more.

Related to " Rebuild Credit Using Credit Cards"
Free Credit Score
What is a Good Credit Score
How to Improve Your Credit Score
How to Build Credit
How to Fix Your Credit
Perfect Credit Score

Why you should know how to rebuild your credit using credit cards

Your FICO credit score, the most widely used and accepted scoring model, is calculated using a variety of factors. It is this score that helps lenders determine whether or not to extend you credit and what the accompanying interest rate may be. It’s important to understand how your score is calculated in order to make strategic steps that are able to improve your score —like rebuilding your credit with credit cards.

Here are the credit factors that are taken into consideration and how much importance are placed on each when calculating your score:

FICO Scoring Model Calculation (Weight) Factors

Credit Factors	Credit Score Weight
Payment History	35%
Credit Utilization	30%
Credit Age	15%
Different Types of Credit	10%
Number of Inquiries	10%

Source: Data found September 26, 2018. Boeing Employees Credit Union website. Understanding Your FICO Score. Retrieved from https://www.becu.org/articles/understanding-your-fico-score

As you can see, payment history and credit utilization (both of which are directly related to your credit card usage) make up the majority of your score.

Here are some quick definitions to help you understand these various factors:

• Payment History—this is your history of paying on-time and includes any missed or late payments.
• Credit Utilization—this looks at the amount of credit you’re using (the balance of your accounts) vs. your available credit limit. The best practice is to keep the ratio under 30%.
• Credit Age —this looks at the average age of all your open credit accounts.
• Types of Credit—this looks at the mixture of credit types you have open like credit cards vs. mortgage accounts.
• Number of Inquiries—this looks at the number of times lenders have pulled your credit information. It’s best to keep this number as low as possible.

If you have questions about how to best increase your credit score using credit cards, you’re not alone. Here are just a few of the questions that Credit Sesame members had when starting to explore this topic:

Increasing	Credit	Limit	to	Increase	Credit	Scores
Q How does increasing your credit limit help your credit?
A Increasing your credit limit helps your credit score by reducing your overall credit utilization. FICO states that credit utilization is responsible for 30% of your credit score. If consumers keep their credit utilization under 10% they are more likely to have a higher credit score than someone with credit utilization at, or above 30% total utilization.
Q Is adding another credit card the same as increasing the limit on my current credit card?
A No, adding another credit card has both advantages and disadvantages. These factors depend on how many inquiries are made into your credit history, the credit limit and whether or not you keep a high balance, and how often the creditors report your activity. Increasing the limit on your current credit card won’t require any credit checks and will automatically decrease your credit utilization ratio.

If you’re ready to improve or rebuild your credit using credit cards, let’s look at the answers to these questions and the steps you can take to get started!

How to rebuild your credit using credit cards

Now that we’ve established a basic understanding of how your credit score is calculated and why it’s so important to have a good credit score, the strategies for rebuilding your credit score with credit cards will make more sense. Let’s look at some of these strategies:

Check your credit report

The very first step to rebuilding your credit is to check your credit report. Knowing your current credit standing will give you the best picture of where you’re starting from —and where you’d like to go. Each of the three main credit bureaus —Equifax, Experian, and TransUnion— are required to provide you with one free credit report per year.

Here’s a quick list of things you should look for:

• Any accounts that aren’t yours
• Any inquiries into your credit that you didn’t authorize
• Any errors to your address and employer
• Any account history (late payments, etc.) that aren’t correct
• Any open accounts you have that haven’t reported
• Any delinquencies, collections, bankruptcies that are not accurate

If you find an error on your report, you can file a dispute with the bureau to have it cleared up.

Make all payments on time

Once you’ve cleared your credit report of any errors, you can focus on best-practices using credit cards that will help improve your situation. Making all your payments on time may seem like a given, but it is one of the most important steps to improving your credit. Remember: payment history makes up 35 percent of your FICO score.

As you can see from the data below, having on-time payments can increase your score as much as 22 points in just 12 months.

Average Credit Score Improvement for On-Time Payments

Credit Starting Point	3 Months	6 Months	12 Months
Bad (550<)	+6	+9	+22
Poor (550+)	+5	+9	+19
Fair (600+)	+3	+8	+17
Good (650+)	+3	+7	+14
Very Good (750+)	+2	+5	+7
Excellent (800+)	+2	+3	+5

Source: Review of 600 individuals who for the course of a year made all payments on time. The study was conducted in February of 2016 and concluded April of 2016.

If you have a hard time making on-time payments, there are some simple solutions you can try to help make the process easier:

• Set up calendar reminders on your phone a week before your payment is due so you’re reminded and have time to take action.
• Sign-up for automatic payments.
• If the creditor doesn’t have a system for automatic payments, create an automatic “bill pay” with your bank so they can send the payment directly and automatically.

Lower your credit utilization

As you may remember from the data above, your credit utilization makes up 30% of your FICO score. It looks at how much of your available credit you’re using. If you have a total credit limit across your different accounts of $10,000 and your balances are $4,000, then your credit utilization is 40%.

Most experts recommend having a credit utilization below 30%, although people with credit utilization below 10% are more likely to have a higher score.

As you can see from the data below, there is a direct correlation between lowering your credit utilization and increasing your score.

Average Credit Score Improvement from Lowering Credit Utilization

Credit Ranking	Low Credit Utilization 10%<	Moderate Credit Utilization 30%<	High Credit Utilization 31%<
Excellent (800+)	+1%	+1%	-7%
Very Good (750+)	+1.8%	+2.5%	-6.5%
Good (700+)	+3%	+3.25%	-5%
Fair (650+)	+4.5%	+6%	-4.25%
Poor (600+)	+6%	+7%	-2.5%
Bad (550<)	+10%	+12%	-2%

Source: Credit Sesame surveyed 600 Americans on how credit utilization impacts their credit scores. Groups were divided by Credit Rank (Bad, Poor, Fair, Good, Very Good, and Excellent) and then subdivided by Low Credit Utilization, Moderate Credit Utilization, and High Credit Utilization. The study took place October 2015 until November of 2016.

Using credit cards can help you improve your credit utilization in three main ways:

1. You can pay off a portion of your credit card to help you improve your utilization to under 30%
2. You can ask your existing credit card to increase your credit limit, which will improve your credit utilization.
3. You can add a new credit card, which will increase your available credit and, therefore, improve your credit utilization.

Once you improve your credit utilization, it’s important to monitor it and make an effort to keep it in that sweet spot between 10 and 30%.

Diversify your credit mix

Another key component in the calculation of your credit score is your credit mix —or the variety of different types of credit you have. This can include credit cards, store credit cards, auto loans, student loans, mortgage loans, and others.

Lenders look for a credit profile that contains a variety of credit types, which demonstrates your ability to handle (and repay) different types of loans. As you can see from the data below, the most impact on a credit score was made by adding a mortgage loan.

Credit Score Improvements Gained by Diversifying Credit Account

Credit Ranking	Credit Cards	Store Credit Cards	Auto Loans	Mortgage Loans
Bad (550<)	+14	+8	+17	+42
Poor (649<)	+12	+7.5	+15	+36
Fair (699<)	+11	+6.9	+15	+34.4
Good (749<)	+10.6	+6.6	+14.3	+30.8
Very Good 750>)	+5.1	+2.1	+11.1	+19
Excellent (800>)	+1.9	+1.6	+3.2	+4.5

Source: Credit Sesame surveyed 600 Americans on how their credit scores improved with the addition of new financial products. Participants were divided by credit ranking and further categorized by the type of financial product they purchased (credit cards, merchant credit cards, car loans, and mortgage loans). The study was conducted August 2015 and concluded August 2017.

If you do not currently have a wide mix of credit, adding a new credit card or a store card could give you an added boost. And, as we mentioned before, this will also help improve your credit utilization.

Consider becoming an authorized user

Another strategy for improving your credit using credit cards is to become an authorized user on another person’s account. Most often, this is a parent with good credit who trusts you to be a responsible user on their existing credit card.

When you become an authorized user, their credit history (related to that card) is reflected on your credit report —essentially giving you an added boost in credibility. This can also help improve your credit utilization.

Average Credit Score Improvement as an Authorized User

Credit Starting Point	3 Months	6 Months	12 Months
Bad (550<)	+16	+27	+43
Poor (550+)	+10	+21	+32
Fair (600+)	+6	+15	+21
Good (650+)	+6	+11	+17
Very Good (750+)	+8	+9	+12
Excellent (800+)	+4	+6	+8

Source: Review of 600 individuals who for the course of a year after being made an authorized user. The study was conducted in February of 2016 and concluded April of 2016.

As you can see from the data above, consumers of all credit ranges were able to increase their score over time by using this strategy. The biggest increase was among those with bad credit (550-600). They were able to increase their score by 43 points in 12 months.

Apply for a secured credit card

A secured credit card is another great option for rebuilding or improving your credit. A secured credit card is backed by a cash deposit that you make when you open the account. The deposit is typically equal to your credit line. If you make a $500 deposit, you’ll have a $500 limit.

The deposit reduces the risk to the creditor because if you don’t pay your bill, they can take the money from the deposit. Often, secured credit cards are available to people with bad or no credit at all.

Building Credit with a Secured Credit Card

Credit Starting Point	3 Months	6 Months	12 Months
Bad (550<)	+7	+12	+25
Poor (550+)	+5	+10	+19
Fair (600+)	+3	+8	+15
Good (650+)	+2	+7	+11
Very Good (750+)	+0	+5	+9
Excellent (800+)	+0	+2	+7

Source: Review of 600 individuals who for the course of a year who had a secure credit card. The study was conducted in February of 2016 and concluded April of 2016.

As you can see from the data above, adding a secured credit card was a great strategy for those with poor and fair credit. In the case of individuals with poor credit, they were able to increase their score 25 points in 12 months, whereas those with fair credit were able to increase their score 19 points in the same timeframe
.

Review and monitor your credit report

As we previously discussed, it’s important to check your credit report so you are aware of what it contains, but it’s also important to review and monitor your credit periodically as you’re trying to rebuild or improve it.

As you can see from the data below, 17% of Credit Sesame members found credit report inaccuracies when they checked their report. Clearing up these inaccuracies by filing disputes with the creditor can have a big impact on your score.

Percentage of Individuals who found Credit Report Inaccuracies

Found Inaccuracies on Credit Report	Members	Non-Members
2014	26%	42%
2015	23%	39%
2016	20.5%	38.5%
2017	17%	37%
2018	16.5%	35%

Source: Survey of 500 members and non-members who check their credit reports yearly. Survey was done in October annually.

f the credit bureau resolves the issue in your favor, your credit score will likely rise. Here are some common credit report errors and the average increase over time to your credit score. It is always a good idea to resolve any errors you find as soon as you can.

Benefits of learning how to use credit cards the right way

Learning how to use credit cards to rebuild or improve your credit is important because not only can you use those tactics and strategies to improve your credit profile, you can continue using them to make sure your credit stays great in the long run.

In addition to the points we’ve outlined above, also consider the following tips as best-practices when it comes to using credit cards:

• Pay off your balance in full each month —you can avoid carrying a heavy debt load by trying not to charge anything you can’t pay for in cash.
• Avoid the temptation of free offers —when you apply for new lines of credit, your credit is pulled and having additional inquiries can lower your score.
• Keep your accounts open —the age of your credit is another factor that impacts your score so be sure to keep open your longest-standing accounts

If you’re looking to improve your credit score, these strategies, along with patience and time, will help you not only with short-term increases, but also long-term improvement.

Conclusion & Summary

To sum it up, rebuilding your credit using credit cards can be a great strategy for success —considering that many of the factors used to calculate your credit score revolve around using credit cards the right way. You can take steps like making your payments on time, lowering your credit utilization, mixing up your credit types, becoming an authorized user, and others to make these improvements. When you learn how to use credit cards to your benefit, you’ll see results both in the short- and long-term.

The post How to Rebuild Your Credit Using Credit Cards appeared first on Credit Sesame.