I’ve been following this advice for almost a year and brought my score up to 654. I started out barely over 500.
You need to have 2 revolving cards (start with secured if needed), like Capital One, Discover or Credit One. Then one retail account (Finger Hut has high approvals with lower scores and covers the “retail” aspect of a well rounded profile), or even Target will work etc. You may be better off with Finger Hut so you don’t get a hit with an inquiry and not get approval.... Especially if you have no credit now.
Then one installment loan (car loan or mortgage) OR better yet, a Self Lender account since you probably don’t have enough credit to get a good car loan.
Self Lender is like a forced savings account that reports your payments to all 3 credit bureaus. You can choose the $25 a month for 2 years and get that back in 2 years, minus the minimal fee.
With those card accounts you want to ONLY want to use 1%-3% of your limit to gain the most points according to the new FICO algorithm. NOT under 30% like previous thought! So on a $200 limit use no more than $6. A Starbucks treat once a month will do. Or whatever you fancy. Then pay off each card, IN FULL each month.
You have these cards/accounts purely to gain a correct profile mix, positive payment history and excellent utilization. Make them work for you. You will see your score rise, credit line increases and Capital One & Discover “graduates” your cards to unsecured with responsible use. Then you will be setting yourself up to get Great interest rates on loans in the future.
Wish I would have learned this YEARS ago!!
