Having good credit makes life easier. It gives you more options in life, it makes it easier to qualify for loans and credit cards (with better interest rates I might add). These loans and credit cards can often be fundamental to building wealth. For example, in the past two centuries, 90% of millionaires, became millionaires through real estate! Now while there are other ways of making money in real estate without taking out loans, the easiest way (in the opinion of most successful real estate investors), is through getting a loan. Lucky for you, today we’re discussing how to improve your credit score (so you can get that loan!) in as little as 30 days!
Piggybacking (becoming an authorized user).
This is the fastest and easiest way to improve your credit score. The process consists of simply finding a friend or family member with a great credit history, and convincing them to add you to the authorized user list for they’re credit line. The idea behind this, is that you the authorized user, gain all of the positive credit history that the primary user has accumulated. Which means in around 30-60 days, you’re credit score could improve as much as 100 points! Goodbye 630 credit score (bad), HELLO 730 credit score!
The best part about this method, is that it isn’t the same as “co-signing” (which is not recommended), so the primary user cannot be negatively affected by the authorized user’s bad credit. But the authorized user benefits from the primary users good credit. Additionally, the primary user can take the authorized user off at anytime without having to close the account. This allows for it to be virtually risk free for the primary user. Nothing to lose!
Now with all that said, you should consider a few things when selecting a primary user to piggyback off of.
- Make sure the account you’re being added to has a long account history (at least 5 years). This will be better for you because you’ll gain more credit history.
- Make sure the credit card company reports the authorized user’s credit information to the credit bureau. Because, what’s the point in doing all of this, if you’re not getting any credit. An easy way to figure this out, is either by directly asking them. Or by whether or not they ask for the authorized user’s SS# (they can’t report your information without it).
- Make sure the account has a large limit, this will help you to keep your balance under 30% which is preferred when building credit.
- Be sure the credit history of the account shows that the balance has been consistently low, and paid on time every month. As you can imagine, if the primary account holders good credit history can help you, any bad history could negatively affect you.
Once you’ve squared away these concerns, you’re in business! However, you should note that underwriters and underwriting software have gotten much better in the recent years. This could mean, that just because you now have a seemingly good credit score, doesn’t necessarily result in you being approved. Some loan providers are going deeper into your credit history and looking at other factors. In the same breath, some loan providers don’t look as deeply. No matter what, you should use this technique to get your foot in the door, and start building your own credit history. So as to make the latter concerns irrelevant. Thanks for reading!