Improve Credit Report – 2 Ways

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. Your credit is being used.

2. Your ratio of available credit to debt is good.

This second factor is very important to the credit bureaus when calculating your score. This is a way you can show that you do have available unused credit.

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.

Another tip, if your credit is to low to be approved for an unsecured credit card. Then ask a friend or relative with good credit 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.

If you choose this route then make sure that you trust the credit card account holder and their financial position. If this account goes delinquent or gets behind it will 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.

You then will have a copy of the credit card with your name on it mailed to your house. I recommend returning the credit card to the account holder.

The accounts’ details are then reported on the original account holders’ credit and yours. This way you receive the benefits of 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.