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Dear Opening Credits,
If I were to open a “no-credit-check” secured Visa such as the OpenSky Secured Visa, would this stay on my credit report as opening a new card? I opened my first credit card in November and earned a higher credit limit just last week, but I would like to keep building credit in a new account without damaging my credit. – Frank
You’re off to a fabulous start! Because the issuer for the account you have now just increased your credit line, you must have been managing your credit well. At the very least you’ve probably been paying your bills on time have been keeping down your debt.
It sounds as though your primary goal is to create and maintain a high credit score.
Yes, you can achieve, create and maintain a high credit score with a new secured card, including the OpenSky Secured Visa.
To get a secured card, you need to offer a cash deposit which will be held by the issuer as security. Unlike most other credit card issuers, OpenSky does not pull an applicant’s credit history for qualification purposes, but it does report your payment history to the big three credit bureaus, which is what you want when building a credit score. So, yes, it will show up as a new account on your credit report.
Adding a new card to your arsenal is a wise move, but know that hard inquiries are temporary and don’t cause a huge amount of damage. If you have the cash to put up for the secured card’s deposit (a minimum of $200), and your credit score is fragile right now, opening the OpenSky secured card might be just what you need.
How hard inquiries impact your credit score
When it comes to credit scores, fewer inquiries are preferable. Typically, each inquiry knocks about 5 points off your score and falls off your credit report after two years. However, other credit scoring factors tend to be weighted more heavily, so become familiar with the process.
FICO and VantageScore are the two most common credit scoring systems. For both, the numbers range from 300 to 850, and higher scores are preferable since they indicate a low lending risk. Although the systems are separate and different, there are enough similarities to offer generalizations on how you can create good scores for each.
Follow these rules to achieve a great credit score
Here are the rules in their basic order of importance, and how you can follow them with ease.
- Pay on time.
Connect your bank account to your credit card account. You can transfer the payment online when the bill is due, or have the sum automatically sent over each month. Autopay simplifies the process, as you’ll never run the risk of forgetting about a bill, but be sure to monitor your statements for accuracy.
- Keep balances well below your credit limit.
Your credit utilization compares the amount of credit being used to the total credit available to you. Having a low ratio is good for your credit score. Experts say you should keep that ratio as low as possible, both overall, and on each card.Track your transactions as you go along, and stop charging before you’re in over your head. If you do use up your credit line for an expensive purchase, go online and pay off the bill immediately. Credit scores can be calculated at any point in a billing cycle, and this is a good way to protect your numbers.
- Use credit regularly, and over time.
You can’t make the clock tick any faster than it does naturally, but just be aware that the longer you use credit products responsibly, the higher your scores will be.
- Create a robust credit portfolio.
Two credit cards in use doubles the payment information that will be listed on your credit reports. Taking out a loan and managing it perfectly (never missing a due date or paying less than is expected) also will help. As time goes on and your income grows, consider adding another type of loan, such as a car loan, to your credit portfolio. Credit scoring formulas reward a diverse credit mix, since it shows you can responsibly handle different types of credit.
- Avoid excess credit applications.
Outside of the OpenSky account, almost all lenders will check your credit history after you submit an application. Don’t panic about this; it’s expected. Just don’t apply for a few (or more) credit products at once, as it is a sign of financial desperation. Only pursue credit cards and loans you really need and want.
Be sure to pull your own credit reports at least once a year so you can be certain everything is accurate. It’s not considered a hard inquiry, so you won’t be dinged. Check your credit scores soon, too. You can get your TransUnion credit report and VantageScores for free at CreditCards.com. Get them again in about a year.
As long as you’ve followed the five rules above, you should see a major improvement in your credit score.
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