If your credit rating is on the low side, there are methods you can use to raise your score somewhat quickly rather than having it be an agonizing process that takes years. One quick way to jump-start your credit is to use a online shopping merchandise card. We'll get back to that momentarily.
Before we do, though, a short explanation of how your credit score is calculated. One way in which your credit score is determined is by determining the number of lenders you have and the amount you owe. This is called your debt-to-credit ratio. If your debt-to-credit ratio is too high, it can greatly impact your score. Say you've used $8500 in credit out of $10,000 in available credit lines. Your debt-to-credit ratio would be 8500/10000 or 85%. High utilization means a low credit score. Lenders check credit reports, and if they don't like the ratios they see, may not grant you credit.
Paying down your outstanding debt is probably the easiest way to improve your ratio, but that's probably unrealistic. The other way to lower your debt-to-credit ratio is to get a new card that has a very high credit limit. While this is the best way to lower your ratio, it's going to be tough going with sub-prime credit. There's a way around this, though: an . Even if you have poor credit, you can get one of these cards. You can, however, only buy things from a limited pool of merchandise from the company that issued the card.
Here's an example of what you can expect: you'll be issued a card, with, say, a $7500 limit. You then go to the vendor website and buy something with the card. Suppose the item costs $500. You pay a small deposit, then put the rest on your merchandise card. This new source of credit will show up on your credit report, decreasing your utilization. The low balance will mean you have more "free" credit, lowering your debt-to-credit ratio.
Before you get an online shopping merchandise card, be aware of the facts. Although they might be VISA or MasterCard branded, they can't be used everywhere as a normal credit card can. You can't buy groceries or other routine products with these cards. You can only use them in a "closed shop" set up by the card issuer. Because of these restrictions, you need to ensure that there's something you actually want to buy from the vendor, and that the prices for their products are reasonable. The most important factor for our purposes when selecting a online shopping merchandise card is whether they report to any of the three major credit reporting agencies.
Online shopping merchandise card issuer policies are quite varied. Some don't report to the credit agencies. Make sure that they do before you get the card, so that you won't be surprised later when your score doesn't improve. The purpose of using these cards is to increase your available credit limit, thus lowering your debt-to-credit ratio, so if the company doesn't report, it's pointless to have the card. If you've done it correctly, you should see your score rise fairly quickly. There's nothing magical about this; it's just exploiting a flaw in the credit reporting system.
TO SEE A LIST OF MERCHANDISE CARDS OFFERS