Improve Credit Score - 2 Ways to Build Positive Credit
Two methods to build positive credit and improve your score. Everyone can do these regardless of their credit history.
You can improve your credit score by having an open major credit card. On this credit card you should try and keep the monthly balance around 10% of your available credit line.
If your credit limit is $1,500 then you want to keep the balance at $150. This will show the credit bureaus two things:
1. You do use your credit.
2. You have a good ratio of available credit to debt.
This means you have available credit that is not being used. The credit bureaus place a large emphasis on your available credit to debt when they calculate your credit score.
By showing you have credit that is not being used; your score will get a bump. This method is most effective with a revolving line of unsecured credit.
Another tip is if your credit is low and you have a friend or relative with a good credit score. Then ask this friend or relative to add you as an authorized user to their credit card account.
This is commonly called piggyback credit. There are rumors that the credit bureaus are not going to give a benefit to an authorized users' credit report.
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.
The account holder just needs to call in to the credit card issuer and add you as an authorized user. This can all be done 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.
Then all the specifics about the account; payments, balance, limit will be reported on your credit too. This is a great way to show the bureaus that you have made on time payments and have 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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