Ultimately, what a person needs to improve their FICO scores and build credit are three open credit cards (secured or unsecured) in good standing and one open installment loan in good standing such as a car, home, student, personal, share secured, or credit building loan. This combination is what the myFICO score theorists here have determined is what you need for optimal credit building and FICO score. You can have more CCs and more installment loans, however, this will not increase your FICO scores.
Next, is paying in full all of the credit card balances each month, before the posting date, except one. This is called the All Zero Except One (AZEO) method. The one credit card you allow to post a balance needs to be less than 8.9% of the credit limit of the card. So using one card each month to buy lunch, letting it report and then paying in full will maximize FICO scoring.
The installment loan will have its greatest impact on your FICO score when the amount owed is at its smallest such as a few months before the loan is paid in full. If you don't have an installment loan you can check into SelfLender or a Share Secured Loan at a Credit Union.
Keep in mind, building credit is a marathon, not a sprint. It involves demonstrating to a potential creditor that a person can handle credit responsibly. Having open, active accounts that are being paid on time and low credit utilization is the fastest way to build good, solid credit.
@Anonymous wrote:Hey everyone, I turned 18 less than 3 months ago, and got my first credit card from discover. I also have a platinum AMEX coming in along with a gold AMEX, which was a free add on (reason I requested it was so that I have more cards to use when purchasing sought after items,which I resell to my customers). I don't plan on getting anymore cards anytime soon since I think 3 is fine for now. Does anyone have any tips on how I can further increase my credit limit (Aside from obviously paying off all my balance before the month) ? Any tips are greatly appreciated, thanks.
1. I think you should slow down, and do your research before rather than after you make big moves.
2. I think you should not use personal cards for business purposes, as that will create tax and accounting nightmares for you.
@3. There is rarely any reason to have 2 charge cards rather than1, with high annual fees as @Anonymous observes.
4. At this stage the most important thing you can do is pay off your balances quickly and build a track record.
5. If you want to add a credit card, you should think carefully about what you are looking for, what you will use it for, etc.
