Reduce Your Debt Owed
One of the biggest reasons that credit card companies won’t approve people for new lines of credit is not that their scores are too low, but that they have too many unpaid debts. The problem isn’t necessarily what debts you have, but the percentage of your credit lines that are being used. For example, if you have several maxed out credit cards, you are using 100% of your available credit. This suggests that you aren’t that great at keeping your debts low. It’s better to have your credit ratio at closer to 80/20 – 80% being open and 20% being used. This suggests to creditors that you are good at keeping up with payments.
Clear Up Collection Accounts
Another reason that your credit may be holding you back from getting a credit card is that you have accounts in collection. There are three things you can do to clear up this problem. First, you can pay off the collection accounts. These payments may not be as expensive as you think – you can often settle for lower amounts with the creditors with a phone call. Second, you can dispute collections accounts that you believe are fraudulent. This can get accounts that you do not recognize off your credit score. Finally, you can contact credit reporting agencies and request that old accounts (more than ten years old) be dropped from your account. This is supposed to happen automatically but it may not always occur, and it’s an easy way to get your score up a few points.
Become an Authorized User for a Family Member
Credit scores can be raised a few points by being added to a credit line that already exists. If you have a family member who is willing to help out, you can be added as an authorized user to their bank account or credit card account. This appears on your credit score as someone vouching for your trustworthiness, so it appears that you are more desirable for credit companies. This can lead to your score being raised just enough to get your own secured card. When you become an authorized user, you have access to another person’s money or line of credit, so be sure it’s someone you trust, and that you are careful with their money and credit score.
Go Secured if You Can
Finally, if you can get a secured card, do that instead of a standard credit card. You’ll need a down payment to put on the account, but it can be as little as $200 for some cards. This can be a great way to get your credit score up so that you can then apply for an unsecured card and get approved. It can also help you learn how to handle credit cards without risk if you have previously had trouble with out-of-control credit card debt.
These tips can help you get your credit score up to just enough to apply for credit cards and begin repairing your score through more traditional methods.