Fico Help Central

The most cost effective and powerful tool for consumers to raise their Credit Score and decrease their debt to credit ratio is to - Get a Credit Card.

Now you’re probably thinking, are you crazy? Credit card debt is probably one of the reasons most people have terrible credit scores to begin with, and you want them to go get another one. Besides, how can people with bad credit even get a credit card.

First, I’ll explain the Why. As with any Credit Card, your credit line WILL be reported to at least one major credit bureau (or more). This means if you get a $5,000 card and you finance $600, it will show up on your credit report, and this is a good thing. It will do three extremely important things for you:

1. It will increase your current “High Credit Limit” by $5,000 almost overnight as you now have an unsecured revolving account.

2. By carrying a small outstanding balance, then paying it off at the end of the month. Then charging again the following month, and paying it off, it will positively impact your credit report by building and showing potential lenders your credit worthiness over time.

3. With a good payment history you are virtually guaranteed to receive “legitimate” pre-approved credit offers in the future due to other lenders renting your name from the credit bureaus.

Of course, the whole key is knowing exactly which cards report to the credit bureau and offer the best rates. Which leads us to the How.

If you were to search on the internet for “Bad Credit Credit Cards,” you will find a TON of companies willing to approve you for a credit card. Why? Because they’re hoping you will run up a tab again and they can earn a lot of interest from you. Also, most of these cards have not only annual fees, but set up fees as well, so they make money upfront.

But you’ll be getting this card just to make your routine monthly charges, such as groceries and gas, then paying it off. So if you don’t carry a balance, no interest. And, after a year of this, you shouldn’t need to be using credit cards with annual fees anymore because you’ll be getting offers from better credit card companies now that your credit has improved.

Do your research and find a card with the lowest set up fees, annual fees, and interest rate, but the highest credit limit.

This tip to Raise your Credit Score only works if you have the discipline to make minimal purchases and pay the balance off every month. But if you do, then you can’t beat it for its simplicity and effectiveness.

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