Improve Credit Score - 2 Tips
An effective method to improve your credit score is to have an open unsecured mastercard or visa. This card should carry a monthly balance of about 10% of your credit limit.
In other words if your limit is $1,000 then try to keep the balance around $100. This shows the credit bureaus two things:
1. You do use your credit.
2. Your ratio of available credit to debt is high.
In other words you have available credit at your disposal. The credit bureaus weight this factor heavily when they calculate your score.
Your score will increase just by showing the credit bureaus that you have credit that is not being used. You will receive the most benefit if this is an unsecured revolving line of credit.
If you have trouble getting approved for new lines of credit, then consider being added as an authorized user. Find a friend or relative with good credit and ask them to add you as an authorized user to their credit card account.
This is commonly referred to as piggyback credit. There have been recent reports that the credit bureaus are no longer going to give any credit score benefits to an authorized user.
However because of the size of the credit bureaus and how difficult it is to change credit scoring between all three credit bureaus this change will take time to implement. It is estimated that authorized user’s will still receive a benefit for the next 6-8 years.
Make sure to use good judgment when choosing a friend or relative. The account will show both positive and any negative information that can be reported. So if the account became delinquent it could hurt your score.
For you to be added as an authorized user, the account holder needs to call the credit card issuer and request you to be added as an authorized user. This can all be accomplished over the phone.
The credit card issuer then sends a copy of the credit card to your home with your name on it. I suggest returning this copy of the credit card to the account holder.
All the details on the account will then be reported on your credit and the account holders’ credit. This is an opportunity for your credit to reflect on time payments and available credit.
This method of building credit is in the process of being discounted. However for the time being it is by far the easiest and cheapest method to building positive credit.
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