How to Improve Your Credit Rating If You Have Insufficient Credit History

According to MyFico, your FICO score ranges from a low of 300 to a high of 850. The higher the score, the better. If you have insufficient, or limited, credit history, you will need to establish new trade lines in order to raise your score. Unfortunately, traditional lenders may hesitate to approve you for new credit. Subprime lenders may approve you for unsecured credit cards but at a high interest rate. There is another alternative, however, that can help you build credit and increase your credit score.

Apply for a secured credit card. A secured credit card looks and works just like a traditional credit card, and it reports to the three major credit bureaus. The only difference is that the card is secured by a cash deposit made to the issuing bank. The bank holds this deposit in a certificate of deposit or savings account. Your credit limit is equal to the amount of the deposit. The Resources section contains a link to a list of of secured credit cards.

Charge a small amount on the card each month once you're approved. Pay the balance off each month. According to MyFico, how well you pay your bills accounts for 35 percent of your FICO score. On time payments over the course of two years will gradually increase your score. FICO gives more weight to your recent payment history than past payment history.

Order a free copy of your credit report one month after making the first payment on your secured card. Under the Fair and Accurate Credit Transaction Act or FACTA, consumers have the right to receive one free credit report each year from the three bureaus: Experian, Equifax and TransUnion. You can order the reports online at, at the bureau's website, by phone or mail.

Check the "Accounts" section of the report to ascertain if the issuing bank has reported the new account, the credit limit, current balance and the first payment. Most issuers do this automatically, but you still want to double-check to ensure the data reported is accurate in order to facilitate the rebuilding of your credit.

File a dispute if the acccount information isn't correct. The Fair Credit Reporting Act or FCRA gives you the right to dispute incorrect or incomplete information on a credit report. You can file your dispute online at the bureau's website, by phone or mail. The bureau then has up to 30 days to investigate and make corrections.

Continue to make on-time payments on the account. Some issuers of secured credit cards will convert a secured card into an unsecured one if you manage your account well. In this case, the bank will refund your initial deposit amount plus interest, if applicable.

Check your credit score periodically to monitor your progress. You can purchase your FICO score at Keep in mind that FACTA gives consumers a free credit report but not a free credit score.


  • Only apply for a secured credit card issued through a major bank. Avoid credit issuers that aren't well established in order to prevent becoming the victim of a scam.


  • Never apply for credit using a public or shared computer. You could become the victim of identity theft if you do. Only use computers that you trust are safe.


About the Author

Mack Mitzsheva is a tax lawyer, personal finance expert and the author of the forthcoming ebook, "10 Best Places to Work Online." Mitzsheva is also a social media entrepreneur with five successful sites under her belt. Always innovative, Mitzsheva is currently developing a cutting-edge budgeting app for newlyweds.