How Do GOOD Credit Repair Companies Increase Your Credit Score….They Add TRADELINES!
Many people go to credit repair companies and the majority of them only address 1 part of the bad credit problem. The negative tradelines. If the tradelines are negative, AND you were unable to negotiate with the original creditor for a more favorable rating. Then by all means work on removing the tradeline. But many of the more comprehensive credit repair companies understand that credit repair is not just about removing the negative, but BUILDING THE POSITIVE!
In this article we look at the most common tradelines and link to places that are EAGERLY waiting to work with borrowers with low credit scores! Don’t forget to BOOKMARK this page. There is a lot of content here so you may want to take it in slowly! If you have questions, leave a comment. And if you like what you see, PLEASE SHARE!
A trade line is a credit account found in your credit report. It can take the form of a credit card, a personal loan, and even an account with a utility service provider. The issuers of your trade lines are expected to submit reports of your credit and payment activities to the three credit reporting agencies. This is how your credit report is built. These companies will report your good, on time payments and your bad, late payments.
So if you pay on time. you will see a series of “C” for current next to each trade line. At a glance, your potential creditors can see if you have good credit habits. If they see a number (like a 1 – that tells them that you paid 1 month late, a 2- means 2 months late and so on.
You should also strive for a good MIX of tradelines. An unbalanced credit report is one that has only 1 or 2 types of tradelines. So as you work on your credit score you want to make sure you get in a good mix of credit cards vs installment loans.
Examples of tradelines:
The easiest tradelines to get approved for are credit cards. Many credit repair companies utilize a combination of secured and unsecured credit cards to help their clients build credit.
RENT AS A CREDIT BUILDER
This is the most OVERLOOKED but VERY EFFECTIVE way to see an instant credit score increase! In most cases, you can see a 15 -35 point increase in your credit score! Adding your rent is a no brainer since in most cases your rent payments are made on time. And did you know you could add up to 2 years of your rental history to your credit report! This creates a VERY POWERFUL tradeline to your credit report. As long as you pay your rent on time (or close – if it doesn’t get to the point that it’s 30 days late) this is a tradeline that will show a high limit along with a consistent payment! This is very powerful, especially for people with very limited credit or who have a lot of negative tradelines. Do you rent a room? You can STILL add it to your credit report as long as whoever you are renting from fills out the form!
* Secured Loans/Secured Credit Cards
You can obtain a secured credit card by depositing a security deposit to a bank or financial company, and they provide you with a credit card. This security deposit is used as your credit limit. You can then use that credit card to make purchases. Secured credit cards tend to have lower fees because your security deposit guarantees the company of being repaid, even if you miss a payment. Secured accounts are a viable way to rebuild credit after a bankruptcy, as long as you pay on time. Secured credit cards are also the PREFERRED method of credit repair companies to rebuild their clients’ credit. Why?
- Much lower fees than unsecured bad credit credit cards
- Most of these cards will become UNSECURED after a year or 2 of good, on-time payments. Meaning at the end of that time period, not only do you have a strong line of credit, but you GET BACK the money you put down as security!
- Much higher credit limits available to their clients since they are secured by collateral. This is important for anyone who has a large future purchase in mind. If you sign up for your secured credit card with a high balance, it will build what is called “comparable credit”. Meaning that if you put $5,000 down as security and let it build for 6 months to a year, it will make it easier to get a $10,000 loan or even larger loan in the future. If the bank sees that most of your credit limits are around $300 – $500 your comparable credit is MUCH lower and so obtaining those large lines of credit will be harder.
These credit cards are issued by subprime lenders. They are very popular with consumers because they are unsecured. The problem is, that there are a lot of fees associated with these cards and very low credit limits. Most of them give you a credit limit of around $300 – $500. And then immediately put their fees on the card so you have to pay the fees first before you have any available credit. The only time this is a good card is when you absolutely have no savings to put down on a secured credit card. But bottomline, whether you choose an unsecured credit card or a secured credit card, you are building new healthy tradelines. So its better than not doing anything at all!
* Installment loans
Car loans are a good example of an installment loan. Most car lots have ties with big finance companies to help their clients get approved for a car loan. If you have credit problems, a few of the sub prime lenders DO NOT REPORT TO THE CREDIT BUREAUS. If this is the case, you can ask them to do so for you. Some will, some will charge a monthly fee to do so.
Retail Cards – In-store accounts for items like refrigerators, washer/dryers, and jewelry that are being paid for on an installment plan should also be included on your credit report if you are making your payments according to schedule. Many of these smaller stores only report to the credit bureaus if an account is placed in collections, ask them to send in a report of your payment history to add a positive tradeline to your credit report. Make sure the creditor notifies all three credit bureaus.
Again, a current mortgage would likely be listed already, but if this is not your first mortgage, and you have other successful mortgages in your financial past, make sure they are listed. This all still weighs in your favor. If you have paid your mortgage on time with an individual who holds the lien to your home, you should get credit on your credit report for it. Most individuals would be fairly baffled at your request to add a manual tradeline to your credit report, simply write the three credit bureaus and ask that they account be added and give your point of contact’s name and phone number for verification. The bureaus will verify the information and have it added to your credit report. Repeat this process a few times a year to keep your information current.
* Utility Accounts
Do you pay your monthly utilities in full and on time? Then try to add them to your credit report. Utilities usually only find their way onto your report if you’re behind in your payments. Paying these items faithfully each month should boost your credit record, but if your local utility companies don’t actively report in to the credit bureaus via a tape system the firm may decline your request to add your history to your credit report. Most will comply and the benefit of having a positive tradeline on your credit report makes it well worth the try.
Things To Remember:
- BE SELECTIVE WHEN APPLYING FOR CREDIT – There are plenty of trade lines you can apply for. You can opt to get a mortgage, car or personal loan, a prepaid, secured or unsecured credit card, and other credit deals. If you are trying to build up your credit, make sure that your potential creditors report to the credit bureaus. Not all companies do. Especially small car lots offering buy here, pay here. Most do not report UNLESS there is a problem and then they will report you late.
- KEEP TRACK OF YOUR PAYMENTS This comes in handy when trying to prove that you paid a bill on time. In fact, you can use them as references when disputing erroneous items and outdated accounts in your credit files. So, make it a habit to keep them with your other important financial documents. That way, you can simply take them out when a sudden need arises. Now with services like dropbox.com, its easy to scan a receipt in and upload it. That way you reduce your clutter and still keep all your documentation in an easy to find place.
- MANAGE YOUR EXISTING TRADELINES – Taking out a trade line is just one part of the equation. It is also important that you manage your existing credit accounts in the best way you can. After all, this can be instrumental for you to attain your target credit rating. To do this, you can simply settle your dues completely and prudently. You should also remind yourself to spend within your credit limit. Finally, you should set a limit to the number of credit accounts you will apply for and manage.
- SHOULD YOU CLOSE EXISTING ACCOUNTS? – Most of the time I will say no. These old accounts can add to your credit score. BUT if you are not using them, most creditors will close them if there is no activity for a year. For my old credit cards that I don’t use that much, I use them at Christmas time and pay them off in January. That way I keep them open and take advantage of having an aged credit line on my credit report.
Why You Must Maintain A Good Credit Score
Banks give the best rates to people with good credit. If you are a chronic late payer, then you can expect to pay a higher interest rate than your good credit counterpart. Make it your priority to pay all bills on time. Don’t max out your credit cards. That will also bring our credit score down. Try not to utilize more than 35% of your revolving credit for a chance at the best rates.
It is also good to note that a good credit history can be an effective tool for negotiating for low interest rates, flexible payment terms, and less fees and charges. So, you should never disregard the power that it could provide credit applicants, like you.
While there is really no substitute for paying your debts on time each month, it’s good to know that there are ways to improve your credit report. The key is knowing what’s in your report, and making sure it’s kept accurate.