Establishing a credit score

It is very important to have open credit lines in order to establish a positive credit score.  If you currently have a credit score of N/A or are missing scores on 1 or more of the 3 credit bureaus you will need to take a look at the following:

Do you have any open *revolving trade lines that you are currently paying on?

If you do not have any open credit cards then you will need to establish 2 revolving credit accounts.  You can go to and apply for one or more of the secured cards there.  Even if you have been turned down for a secured card in the past these banks will approve you.

Do you have any open *installment trade lines that you are currently paying on?

Now I am not suggesting that you run out and buy a car (definitely do not do that) but it is important that you have the proper mix of credit on your credit report.  You can get what is called a “secured credit builder loan” at BMO Harris Bank.  This is an installment loan in which you will make monthly payments to pay off a $1000 line of credit and at the end of 24 months you will have $1000 CD in your name.  This will report to all 3 credit bureaus.

Lenders like to see 3 open trade lines which include 2 revolving and 1 installment loan.  This will give you the best mix of credit and will score you the highest with the credit bureaus.  Remember to always keep your revolving credit card balances under 30% of the available credit line to maximize your credit score.

How is my credit scored?

Payment History – 35%

Capacity (balances to limits) – 30%

Length of Credit History – 15%

Type of Credit – 10%

New Credit – 10%

*Revolving Credit – credit that is automatically renewed as debts are paid off.

*Installment Credit – Installment credit (or an installment account/installment loan) is a type of credit where the consumer borrows a set amount of money and agrees to pay it back over a fixed period of time. The payment on an installment loan is the same every month.

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