If you’ve been looking for information on how to raise your credit score, the answer might be closer to home than you think. Believe it or not, asking a family member for help can go a long way, especially if you’re building your credit score from scratch. Keep reading to learn what strategies you can use to give your score a boost.
How your family can help you build credit
Become an authorized user
Also known as “credit piggybacking,” when you become an authorized user on someone else’s account, you’re essentially getting the benefit of the primary cardholder’s good credit. After being added to a card, you’ll have the benefit of being able to use the card without the responsibility of having to make payments. That card's payment history also becomes part of your credit report and contributes to your score.
Since the primary cardholder’s actions will also affect your score, you’ll want to ask this of someone who has a score within the “good” or “excellent” FICO credit score range. If they make payments to the card on time, it will benefit your score. However, if they miss payments or run up a big balance, it could end up hurting your score even further.
Ask someone to be your co-signer
If you’d rather get a card of your own, your other option is to ask a family member to be your co-signer on a credit card or a loan. In this case, you’d be applying for the card together and, though you would be the primary cardholder, both of you would be on the hook for payments.
Keep in mind that any credit card or loan that a family member co-signs will also show up on his or her credit report. If you don’t make payments, the lender will go to your family member to be made whole and it will likely damage their score. With that in mind, you’ll want to be sure to use good credit habits if someone agrees to co-sign a loan for you.
Other strategies build your credit
Not everyone has a family member or close friend who is able to help them boost their credit score. To that end, here are some additional strategies that you can use to build credit on your own.
Make your payments on time
Making your payments on time every month is the best way to improve your credit score ranking. In fact, your payment history accounts for 35 percent of your overall FICO score, which is the most commonly used scoring model. In addition, you should always try to pay as far above the minimum payment as possible.
Keep your balances low
Credit utilization accounts for another 30 percent of your FICO score. This is the measure of the amount of credit that you’re currently using versus the total amount of credit that you have at your disposal. The lower your balances are, the better it is for your score.
Apply for one card at a time
Every time you apply for a credit card, it results in a hard inquiry that stays on your credit report for two years. Each hard inquiry temporarily lowers your score. However, if you only apply for one card at a time, the impact isn’t too severe. It’s when you take out several applications at once that you risk taking a harder hit.
As for how often your credit score is updated, new information flows from the credit card issuer to the credit bureaus each month. Unfortunately, though, there is no quick fix. It’s only when you're consistent about making your payments on time and keeping your balances low that you’ll begin to see a substantial change in your score.