In order to achieve a high credit score, your credit report should contain two revolving credit card accounts and one installment loan. Revolving credit cards, whether they are unsecured or secured by your money, have an available credit limit monthly that you can borrow against and pay back over and over. Installment loans have a lump sum of money provided that you make monthly installment payments until the loan is paid off like a student loan, mortgage or auto loan.
Your credit report contains the last 7-10 years of information reported but the credit SCORE is most affected by the activity on open accounts reporting in the last 24 months. Even if you have pages and pages of bad accounts reporting, before you begin to repair or dispute anything you must get these three accounts set up to drown out the bad with good as you work to repair your credit.
The two credit cards will work best in your favor if you “assign” them a task rather than use them as back up income or cash. Here are my suggestions below for an example “assignment” and where to go to get the credit card or installment loan set up. I suggest getting the first account set up as soon as possible with the other two to follow as you are able to but the sooner this system is set up, the faster your score will improve without having to tackle the bad credit first. Put a reminder in your phone once a month to “Use your Give Back card” and once a month to “Use your Be Present Card”. If you only use them for this purpose once a month, you will have VISA working for you instead of you working for VISA all your life.
Give Back – www.openskycc.com
o Once a month use your credit card to give back and loosen your grip on money
o One $20-30 charge automatically assigned to donate to charity, shelter, gift card for someone in need…
o Automatically pay off the credit card with bank account monthly.
**Open Sky does not require good credit to get a credit card but you will need to make a $200 deposit from your bank account to receive a credit card with a $200 credit limit. Never spend more than $20 – 30 a month on this card.
Be Present – www.discover.com/credit-cards/secured/
o Once a month use your credit card to remind you to be present in the moment and not just pay bills out of habit
o One $20-30 charge automatically assigned to pay Netflix, Hulu, $20 gift card to use for a date with the person of your choice.
o Automatically pay off credit card with bank account monthly,
**Discover It Secured Card does not require good credit to get a credit card but you will need to make a $200 deposit from your bank account to receive a credit card with a $200 credit limit. Never spend more than $20 – 30 a month on this card.
Pay your future self – www.selflender.com
o Credit builder loan/savings account you get credit for (BMO Harris or selflender.com)
o Pick term and amount you want to save
o Make monthly auto payment to bank
o Reports monthly to 3 bureaus
o End of term – collect the savings and interest.
Check out Alisa’s latest credit video:
If you already have two credit cards open, you don’t need to apply for the Open Sky or Discover card to set up your system. Any two credit cards that report to all three bureaus will work. For a guide on the best reward cards for 2018, check out this guide from Lendedu.