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feedthepig

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Why is my credit issue "thin file " and how do I fix that? Had credit card for a year .
I pay my credit card balance off every month, thought that was a good way to get a good credit rating.

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Because you only have one credit card and no other installment loans.  Apply for another credit card and or store card, see if you can get a small personal loan.

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Here's the plan

Credit scoring is based on mathmatical averages.  You have 1 credit card reporting once a month so you only have 12 "gold stars" to your credit. 

There are 84 reporting months in the "average history" Which goes back the last 7 years.  Right now you have 12 out of a possible 84.  I know its not fair but the system is designed to protect creditors from lending to risky borrowers and uses the law of averages to give out scores.  You are a high risk because you have very little history to rely on.  

Now to change that you need to multilpy the number of "Gold stars" you get.  You now want to get more credit cards.  I'm not saying "go out and apply for new credit everyday"  you need to be strratigic in your planning or it will back fire on you.  

here are my "Rules of thumb" for new credit when building credit.  Not saying that this is "Solid financial Info" just saying this worked for me.  

1) Always pay credit card balances off in no more than 4 payments.  If you can't pay if off in 3, think twice before making the purchase.  Overuse of credit is the biggest killer of credit scores 

1A)  Set up automatic payments so that you are never late with a payment.  My bank offers a great eBanking program that makes seeing and paying my bills very easy.  Find a system that works for you so that you never miss a payment. 

2) apply for only 1 new credit card or loan about every 6 to 9 months.  This should give you no more that 5 inquiries on your report at any given time. 

3) never apply if your score is below 600, If it is, consider a secured card that way you are not denied, or just wait, A few more on time payments just might bump your score up. 

4) If you are EVER denied for credit, Do not apply for more credit for at least 9 months

5) Never refuse a credit card because you don't like the interest rate or rewards program.  All credit is good credit if its extended to you. Even if you only use it once a           year, it will report 12 gold stars a year for you. 

5A) never choose a credit card solely based on the reward programs.  unless it is your only card, they generally don't generate a huge refund or miles.  Only Redeem the rewards once at the end of the year and you'll have a real idea of what they actually add up to.   

6) Your goal:  total of all your credit card limits (total available credit ) should equal at least 1 years income. Amount you owe on that debt should be less than 25% at all times.  10% to 15% is even better.  Once this goal is reached then slow your applications for new credit to once a year or so. Keep your utilization low.  You want the majority of your cards to be reporting 0 balances.  This is part of your "Emergency Fund". If you have a catastrophe, you will have the credit available to deal with it.  Your credit limits will be increased over time as you accumulate those gold stars!  

Hope that helps and Good Luck 

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