Revolving accounts and installment accounts are both important account types when building credit, but they are not equally powerful when it comes to your credit score. Which type of account has a greater impact on your credit score? Keep reading to find out.
Revolving Debt vs. Installment Debt: Definitions Revolving Credit Account Definition
A revolving credit account is an account that allows you to “revolve” a balance, which means you do not have to pay the full outstanding balance on the account every month.
Revolving accounts typically have a credit limit up to which you can charge up to. You can choose how much to borrow from the account; you do not have to use the full credit limit. Once you make payments against the balance, that amount of credit is then available for you to use again.
Revolving accounts include lines of credit and credit cards.
Installment Credit Definition
Installment credit, in contrast, is credit where the full loan amount is disbursed at one time. You then make regular payments of a fixed amount toward the debt over a certain period of time.
Installment debt includes mortgages, auto loans, student loans, personal loans, credit-builder loans, and any other type of loan that has a regular payment schedule of fixed payments.
How Installment and Revolving Debts Affect Your Credit Score Revolving Accounts and Your Credit Score
Five main factors are considered by FICO scores.
As you know from our article on credit scores, there are five main factors that influence your FICO score:
Revolving accounts can have a significant effect on each of these five factors.
As far as payment history, it’s important to pay your bills on time every single month just like any other account. However, with revolving accounts, you do not have to pay off the full balance every month. Instead, there is likely a minimum payment amount that you will be required to make. If you make a payment that is less than the minimum payment, your account will still be considered delinquent.
A lot of the power of revolving accounts comes from their influence on your utilization. This is because the credit utilization factor of your credit score places much more importance on the utilization of your revolving accounts.
Having high revolving utilization means that you are using a large portion of your available credit, which indicates to lenders that you might be at an increased risk of default. That’s why high credit utilization is bad news for your credit score.
If you run up a balance on a credit card and then only pay the minimum payment each month, you will be increasing your credit utilization. Since utilization makes up 30% of your FICO score, carrying a balance on your revolving accounts can seriously reduce your score.
Credit age is also important since it goes hand-in-hand with payment history. The longer you keep your revolving accounts open, the better. Even after they are closed, they can still continue to age and impact your average age of accounts.
Having a few different revolving accounts is also beneficial to your credit mix. Consumers with FICO scores of 785 and up have an average of seven credit cards in their credit files, including both open and closed accounts. In fact, if you don’t have enough revolving accounts, you can get dinged for a “lack of revolving accounts,” because without them there is not enough information to judge your creditworthiness, according to Discover.
Having too many inquiries for revolving accounts or too many new revolving accounts can hurt your credit score. Typically, each application for a revolving account is counted as a separate inquiry.
Installment Loans and Your Credit Score
When it comes to your credit score, installment loans primarily impact your payment history. Since installment loans are typically paid back over the course of a few years or more, this provides plenty of opportunities to establish a history of on-time payments.
Since installment loans typically don’t count toward your utilization ratio, you can have a high amount of mortgage debt and still have good credit.
Having at least one installment account is also beneficial to your credit mix, and installment debt can also impact your new credit and length of credit history categories.
What installment loans do not affect, however, is your credit utilization ratio, which primarily considers revolving accounts. That’s why you can owe $500,000 on a mortgage and still have a good credit score. This is also why paying down installment debt does not help your credit score nearly as much as paying down revolving debt.
This is the key to understanding why revolving accounts are so much more powerful than installment accounts when it comes to your credit score. Credit utilization makes up 30% of a credit score, and that 30% is primarily influenced by revolving accounts, not installment accounts.
In addition, with a FICO score, multiple inquiries for certain types of revolving accounts (mortgages, student loans, and auto loans) will count as just one inquiry as long as they occur within a certain time frame. As an example, applying for five credit cards will be shown as five inquiries on your credit report, whereas applying for five mortgage loans within a two-week period will only count as one inquiry.
Why Are Revolving and Installment Accounts Treated Differently By Credit Scores?
Now that you know why revolving accounts have a more powerful role in your credit score than installment accounts, you might be wondering why these two types of accounts are considered differently by credit scoring algorithms in the first place.
According to credit expert John Ulzheimer in The Simple Dollar, it’s because revolving debt is a better predictor of higher credit risk. Since credit scores are essentially an indicator of someone’s credit risk, more revolving debt means a lower credit score.
Since revolving accounts like credit cards are usually unsecured, they are a better indicator of how well you can manage credit.
Why is it that revolving debt better predicts credit risk than installment debt?
The first reason is that installment loans are often secured by an asset such as your house or car, whereas revolving accounts are often unsecured. As a result, you are going to be less likely to default on an installment loan, because you don’t want to lose the asset securing the loan (e.g. have your car repossessed or your home foreclosed on). Since revolving accounts such as credit cards are typically unsecured, you are more likely to default because there is nothing the lender can take from you if you stop paying.
In addition, while installment debts have a schedule of fixed payments that must be paid every month, revolving debts allow you to choose how much you pay back each month (beyond the required minimum payment). Since you can decide whether to pay off your balance in full or carry a balance, revolving accounts are a better reflection of whether you choose to manage credit responsibly.
How to Use Revolving Accounts to Help Your Credit
Since revolving accounts are the dominant force influencing one’s credit, it is wise to use them to your advantage rather than letting them cause you to have bad credit.
Here’s what you need to do to ensure your revolving accounts work for you instead of against you:
Make at least the minimum payment on time, every time. Don’t apply for too many revolving accounts and spread out your applications over time. Aim to eventually have a few different revolving accounts in your credit file. Keep the utilization ratios down by paying off the balance in full and/or making payments more than once per month. Use our revolving credit calculator to track your utilization ratios. Avoid closing revolving accounts so that they can continue to help your credit utilization.
Revolving Accounts vs. Installment Accounts: Summary
Revolving accounts are given more weight in credit scoring algorithms because they are a better indicator of your credit risk. Revolving accounts play the primary role in determining your credit utilization, while installment loans have a much smaller impact. High utilization on your revolving accounts, therefore, can damage your score. With a FICO score, inquiries for installment loans are grouped together within a certain time frame, while inquiries for revolving accounts are generally all counted as separate inquiries. Therefore, inquiries for revolving accounts can sometimes hurt the “new credit” portion of your credit score more than inquiries for installment accounts. Use revolving accounts to help your credit by keeping the utilization low and keeping the accounts in good standing.
What is credit piggybacking? If you’re not sure what this strange term could possibly mean, you’re definitely not alone.
Credit piggybacking, also referred to as “credit card piggybacking” or “piggybacking credit,” is a commonly used credit-building strategy. However, many people are still unaware of how to access this strategy and use it to their advantage.
In this article, we’ll define what piggybacking for credit means and how it can help your credit.
Credit Piggybacking Definition
The general definition of credit piggybacking is building credit by sharing a credit account with someone else. For example, spouses, business partners, and parents and children are all common examples of people who often share credit.
There are three main ways in which credit piggybacking can take place, which we discuss in more detail in “The Fastest Ways to Build Credit”:
Opening an account with a cosigner or guarantor is one way to piggyback on someone’s good credit.
Opening an account with a cosigner or guarantor, which is someone who promises to be responsible for the debt if the primary borrower cannot repay it. If the cosigner or guarantor has good credit, the borrower may be able to qualify for credit that they could not qualify for on their own or qualify for better terms. Opening a joint account with another person, which means both parties have full access to the account and are both held fully responsible for the account. By opening a joint account with a partner who has good credit, a person with less-than-ideal credit may be able to open an account that they wouldn’t have qualified for on their own or get more favorable terms. Becoming an authorized user for the purpose of credit card piggybacking, meaning you are not responsible for the debt, but the entire history of that account may be reflected in your credit file, regardless of when you were added to the account.
When people talk about piggybacking credit, they are usually referring to the method of piggybacking using authorized user tradelines.
How Does Authorized User Piggybacking Work?
Here’s how piggybacking works as an authorized user:
When you are added as an authorized user to someone’s credit card, often (depending on the bank), the full history of that account will then be shown in your credit report, regardless of when you were added to the card. Therefore, piggybacking can almost instantly add years of perfect payment history to the authorized user’s credit file. Authorized user tradelines can affect many important credit variables, such as your average age of accounts, age of oldest account, overall utilization ratio, number of accounts, mix of accounts, and more. Historically, only the wealthy and privileged were able to use piggybacking as a credit-building strategy. Now, there is a marketplace where tradelines can be bought and sold, which is helping to democratize the credit system and provide equal credit opportunity.
The issue of piggybacking went all the way to Congress, which upheld consumers’ rights to use authorized user tradelines.
Is Piggybacking Credit Legal?
While Tradeline Supply Company, LLC does not provide legal advice, we can provide evidence that supports the idea that piggybacking credit is legal.
Firstly, piggybacking for credit is an extremely common practice that has been in use since the advent of credit cards. Studies estimate that 20-30% of Americans who have credit records have authorized user accounts in their credit file.
In addition, about 25% of people who have credit reports initially established their credit files by piggybacking in one way or another.
Many banks actually encourage consumers to add authorized users for the express purpose of boosting their credit scores.
You may have heard about FICO trying to take away authorized user privileges in 2008. But what you probably didn’t hear about was FICO backing down after a congressional hearing that involved the Federal Trade Commission and Federal Reserve Board.
During the hearing, FICO admitted that they could not legally discriminate between spousal AUs and other users, because this would unlawfully violate the Equal Credit Opportunity Act.
Since the U.S. Congress has upheld consumers’ rights to use authorized user tradelines, it seems reasonable to conclude that authorized user tradelines are legal.
However, it is important to get your tradelines from a reputable source. Some tradeline companies use illegal credit profile numbers (also known as CPNs) to mislead creditors as well as consumers. That’s why consumers should only work with tradeline companies that don’t use or sell CPNs—learn more about CPNs and why Tradeline Supply Company, LLC does not accept them.
Does Piggybacking Credit Still Work?
As we discussed in “Do Tradelines Still Work in 2020?”, credit piggybacking still works, and we think it will be around for a long time.
Piggybacking credit is a well-established credit-building strategy that has been defended in Congress and promoted by banks. It is a significant part of our credit system.
Thanks to the Equal Opportunity Credit Act, authorized user tradelines are still a very important factor in credit scoring models.
Not only that, but even if FICO were to devise an algorithm intended to exclude piggybackers, it would be quite some time before lenders could implement it on a large scale. The slow-moving financial industry is still using FICO scores that were developed decades ago.
Piggybacking companies bring together buyers and sellers of authorized user tradelines.
What Do Piggybacking Companies Do?
Friends and family will often allow each other to piggyback, but for many people, it’s difficult to find someone with good credit to piggyback on. A third party can play a role in helping to connect people who are looking to purchase seasoned tradelines with people who have high-quality tradelines to offer.
Piggybacking companies, more commonly referred to as tradeline companies, simply facilitate the buying and selling of authorized user tradelines.
The tradeline company acts as an intermediary by marketing the tradelines to consumers, protecting the identities of the clients, and preventing fraud.
At Tradeline Supply Company, LLC, we provide an innovative platform through which users can buy and sell tradelines entirely online. We also provide educational resources so consumers can familiarize themselves with the credit system and how piggybacking works.
How Long Does Piggybacking Credit Take Before I See the Tradelines on My Credit Report?
The account you are piggybacking on can show up on your credit report in as little as 11 days, depending on several factors relating to the particular tradeline.
Each piggybacking tradeline has its own reporting cycle, and Tradeline Supply Company, LLC provides a “purchase by date” before which you must purchase your tradeline in order for us to guarantee that it will post in the coming reporting cycle. If you miss the purchase by date, it will simply show up in the following cycle.
If you have purchased a seasoned tradeline that you believe has not posted, first, check to make sure that the entire reporting period has passed, then check your credit reporting service again to verify that it still has not posted. If you take these steps and determine your tradeline has not posted, please reach out to us for support and we will rectify the situation.
Can Piggybacking Hurt Credit?
If credit piggybacking is done incorrectly, it can actually backfire and hurt your credit.
Because the full history of the credit account is reflected in the credit file of the piggybacker, that means any derogatory factors will show up, too.
For example, if the account has any late or missed payments, that could hurt the authorized user rather than help. Similarly, a high utilization ratio on the account could also damage the authorized user’s credit.
That’s why we recommend going with a reputable piggybacking company who guarantees a perfect payment history and a low utilization ratio (15% or lower) on all tradelines. This will virtually eliminate the risk of your credit being hurt by these factors.
The only other way piggybacking could hurt your credit is if you choose the wrong piggybacking credit card. It’s essential to choose the right tradelines for your credit file. To do this, you’ll need to figure out your average age of accounts and how adding a tradeline could affect this statistic.
For example, if your average age of accounts is five years and you decide to piggyback on a tradeline that is two years old, this would bring down your average age of accounts, which is the opposite of what you want to achieve with tradelines.
If you’ve just resolved some errors on your credit report or paid down your balances and you’re wondering how to update your credit report information fast so that you can improve your credit rating quickly, you may be interested in something called a rapid rescore. You can find the answers to all of your questions about rapid rescores in this article.
What Is a Rapid Rescore?
A rapid rescore is a process that mortgage lenders use to manually update your credit report information with the credit bureaus so that your score can be recalculated quickly. Instead of waiting for your creditors to report your information to the bureaus periodically, your mortgage lender can provide the information to the bureaus and request that they update your credit report right away.
When Would You Need a Rapid Rescore?
Since mortgage loans are time-sensitive, a rapid rescore can definitely be a useful tool in certain situations. If you are in a situation where there’s been a change to one or more of your tradelines that has not yet been reflected in your credit report, and you need to rapidly increase your credit score in order to qualify for better mortgage terms, you may want to consider requesting a rapid rescore.
Rapidly increasing your credit score before getting approved for a mortgage could mean qualifying for a lower interest rate and therefore huge savings in interest over the term of your loan.
For this reason, the best candidates for a rapid rescore are consumers who have credit scores between the mid-600s and the 720s who are five to 10 points shy of their target score, according to Bankrate. The maximum benefit of a rapid rescore is gained by borrowers who are able to get bumped up to the next credit score “tier” in order to qualify for a lower interest rate, which can ultimately save them thousands of dollars over the course of the mortgage.
If you have recently paid down some of your revolving balances, a rapid rescore could get your credit score to reflect your lower credit utilization sooner.
Of course, it’s always best to plan ahead well in advance of applying for a mortgage so you have plenty of time to get your credit score in great shape first. However, sometimes situations may arise in which a rapid rescore would be beneficial. Some examples of situations that might call for a rapid rescore include:
If you have recently received a credit line increase If you have just paid down the balance of an account If you have been added as an authorized user to an account in good standing or removed from a derogatory account If you need to dispute inaccurate negative items on your credit report, such as late payments that were being reported in error
Remember, credit utilization makes up 30% of your credit score, so any action you take to improve your credit utilization ratio, such as paying down account balances, may help boost your score and get you a better deal on your mortgage.
How to Get a Rapid Rescore
If you need to know how to improve your credit rating quickly through a rapid rescore, keep in mind that not just anyone can request one. Rapid rescores are only offered by mortgage lenders, so, unfortunately, you cannot get a rapid rescore on your own. If you are in the process of applying for a mortgage, ask your lender if they can complete a rapid rescore for you.
How Long Does a Rapid Rescore Take?
The great thing about a rapid rescore is that it can get the credit bureaus to update your credit report within just a few days, instead of waiting for weeks or even months for it to happen automatically. Once your mortgage lender submits all the necessary documentation to initiate the rapid rescore, you should see your new results in three to seven business days.
A rapid rescore can update your credit report in days instead of weeks, which can be useful when applying for a mortgage.
How Much Does It Cost to Do a Rapid Rescore?
According to creditcards.com, the cost of a rapid rescore typically ranges from around $25 – $30 for each account that needs to be updated. However, the mortgage lender should be paying for the rescore, not the consumer.
The reason for this is that a rapid rescore is considered an expedited dispute process, and the Fair Credit Reporting Act says that consumers cannot be charged to dispute inaccurate information.
Does Rapid Rescore Really Work?
When it comes to rapid rescore results, they will likely be the same as if you had gone through the normal channels to submit a dispute. Remember, a rapid rescore is essentially an accelerated credit report dispute. The rescore itself is not guaranteed to make your credit score increase.
If you are using the rapid rescore to remove inaccurate information that has been dragging down your credit score, then you should see positive results from the rescore.
However, just as in traditional credit repair, a rapid rescore cannot be used legitimately to try to remove information that is accurate. If the derogatory items on your credit report are accurate and timely (from within the past seven years), then a rapid rescore won’t be able to help you.
Rapid Rescore Companies
Companies that offer the rapid rescore service to borrowers include mortgage lenders such as banks and credit unions. Not all mortgage lenders offer the service, though, since it can end up being expensive and lenders are not allowed to charge borrowers for a rapid rescore.
If you are getting ready to apply for a home loan and you think you may want to have the option of doing a rapid rescore, ask the banks or mortgage lenders you are interested in whether the companies offer the rapid rescore service to borrowers.
If you find any rapid rescore companies advertising their services to individual consumers, use caution and watch out for possible scams.
You can use our tradeline calculator or a credit score simulator to get a general idea about whether a rapid rescore could benefit your score.
Rapid Rescore Calculator
To calculate your rapid rescore results, you don’t need a specific rapid rescore simulator. Just use your favorite credit score simulator and plug in the numbers that make sense for your situation.
If you are planning to do a rapid rescore after paying off $5000 in credit card debt, for example, you could enter that information into the credit score simulator to calculate what the results of your rapid rescore might be. You could also try our Tradeline Calculator to see how your credit utilization ratios would change as a result of paying down some of your accounts or transferring balances.
However, keep in mind that any credit score simulator is likely not going to produce the exact same results that your lender will see. Online credit score calculators typically use simplified credit scoring algorithms to produce estimates, which may not always match up with the numbers the mortgage lender sees when they pull your FICO scores.
How to Do a Rapid Rescore Yourself
Unfortunately, it’s not possible to do a DIY rapid credit rescore on your own, since only mortgage lenders can perform this service on your behalf.
What you can do is prepare thoroughly to ensure your dispute will be accepted. As with a normal credit report dispute, you’ll need to provide proof to support your claim. This often means obtaining a letter from the creditor verifying the change that you can then provide to the credit bureaus.
For example, if you have just paid down the balance on one of your credit cards, you can ask the credit card company to send you a letter verifying the updated tradeline information. Your mortgage lender can then submit this to the credit bureaus to get you a rapid rescore.
How to Update Credit Report Information
To update your credit report information yourself, you can obtain a letter from your creditor and forward it to the credit bureaus.
Although you can’t officially do a DIY rapid credit rescore yourself, you can trigger a manual credit report update by submitting your documentation directly to the credit bureaus. However, your tradeline may not be updated as quickly as when your mortgage lender pays for the privilege of an expedited update.
To summarize, follow these steps to manually update tradelines in your credit report:
Contact the creditor and request that they send you a letter that verifies the updated account information. Send this letter to the credit bureaus and request that they update the information in your credit file.
Once they receive your information, the credit bureaus should then update the information for that tradeline in your credit profile.
In addition, some banks may report a tradeline in the middle of a reporting cycle if you pay down the balance to zero.
Rapid Rescore Success Stories
If you’re interested in reading some rapid rescore success stories, you can find plenty of them online. Try searching in some online credit forums to see the rapid rescore results other consumers have been able to achieve.
Some consumers may see a credit score boost of up to 100 points after a rapid rescore, although results vary widely based on what information is being changed.
Some sources say they have seen credit score increases of up to 60 points after a rapid rescore, while others claim that a rapid rescore could potentially boost one’s credit score by up to 100 points. However, keep in mind that the result of a rapid rescore is going to depend on what information in your credit report is being updated and how severely it had been affecting your score.
Conclusions on Rapid Rescores
Although a rapid rescore won’t necessarily raise your credit score per se, it can be a very useful tool if you need to get your credit report and credit score updated within a few days rather than waiting weeks or even months for the credit bureaus to update your information normally.
When applying for a mortgage, a rapid rescore may be used to increase your chances of getting the best possible rate on your loan by getting positive changes to reflect on your credit report and in your credit score quickly.
Only some mortgage lenders offer this service, so check with your lender to see if they provide rapid rescores to their clients.
In addition, it’s a good idea to check your credit reports several months in advance so that you have plenty of time to correct any errors and pay down your balances. That way, you can decrease the likelihood that you will have to rely on a rapid rescore when applying for a mortgage.
There are plenty of articles out there about the fastest ways to raise a credit score, but the focus of this article and infographic is a bit different. Rather than giving you shortcuts on how to boost your credit score, we’re talking about the fastest ways to build credit for long-term success.
While raising a credit score can be accomplished in various ways, not all of them involve actually building your credit profile by adding more accounts. Credit repair companies may offer tactics on how to raise credit scores by removing negative, inaccurate information from your credit file, but this strategy doesn’t do anything to build your credit history by establishing new accounts. They may remove harmful inaccurate information, but they often lack in assisting with credit re-establishment.
Opening a mix of several different accounts and keeping them in good standing is crucial for building a good credit record, but this process takes time. It is well-known that a credit account needs at least two years of history to be considered “seasoned,” which is when it has enough age to show that you can properly handle the account and therefore begins to improve your credit score.
Before this point, when an account is still young, it represents a risk to the lender because they don’t know if you will use the credit responsibly. They don’t know if you are going to max out your cards, miss payments, etc. That’s why new accounts often hurt your credit temporarily.
So what can you do if you don’t have 2+ years to open new accounts and wait for them to age? What if you can’t get approved for credit on your own to begin with? How do you build good credit fast?
Piggybacking: The Fastest Way to Build Credit
The answer to how to build credit fast is piggybacking. This term refers to the practice of building credit by becoming associated with someone else’s credit accounts.
This might sound surprising, but studies have shown it is a very common practice. A study of over 1 million consumers by the Consumer Financial Protection Bureau showed that nearly a quarter of consumers transitioned out of credit invisibility by piggybacking on the creditworthiness of others. According to a survey by creditcards.com, 86 million Americans have shared a credit card account with someone else!
Additionally, a study by the Federal Reserve Board found that about 30% of consumers with a scorable credit record have at least one authorized user account on their credit record.
There are three main ways that piggybacking occurs: getting credit with a co-signer, being a joint credit account holder, or becoming an authorized user.
Build Credit Fast With a Cosigner or Guarantor
One very common strategy for someone who needs help building credit fast is to apply for credit with a cosigner or guarantor, which is a person who can be responsible for the debt in the event that the primary borrower cannot repay it. The cosigner or guarantor does not typically receive access to the funds or make payments on the debt unless the primary borrower is no longer able to.
A cosigner or guarantor can help a borrower get credit by pledging to be responsible for the debt if the primary borrower cannot repay it.
Pros:
Since the cosigner or guarantor’s credit record and income are considered when applying for credit, the primary borrower may be able to piggyback off the cosigner’s good credit to qualify for credit or get better terms.
Cons:
Getting credit with a cosigner or guarantor means opening a new account, which dings credit temporarily. It is still going to take a few years for the account to age enough to help build your credit score. It may be difficult to find someone willing to cosign on a loan or credit card since it is a risky proposition without much benefit for the cosigner. Some lenders, particularly credit card issuers, may not even allow cosigners. It may be difficult or impossible to remove the cosigner in the future, so the cosigner must be willing to potentially be permanently associated with the account.
Building Credit as a Joint Account Holder
As joint account holders, two parties apply for one account that they can both use. Both parties have full access to the account and both are held fully responsible for the account. Joint accounts are most commonly used by spouses with shared finances.
Joint accounts can help build credit, but they are most commonly used by spouses with shared finances.
Pros:
Both applicants are considered by the lender when issuing credit. By pairing with someone with good credit, a person with less-than-perfect credit may be able to open an account that they wouldn’t have qualified for on their own, or get more favorable terms. If the joint account is kept in good standing over time, it can continue to help build the credit of the user who needs to improve their credit profile. A joint account can make it easier for two people to manage their finances together. Both account holders have access to the privileges associated with the account, such as rewards. A joint account is also considered a primary account since each borrower has full access to the account and full liability for the debt.
Cons:
Opening a joint account means adding a new account to your credit report, which decreases the average age of accounts and can temporarily hurt your credit. The account will still need at least two years to age enough to help improve your credit score. Both users are fully responsible for the debt. If one person maxes out the account, the other can legally be held responsible. It’s always possible that an event such as a breakup could change the relationship between account holders, which could make it difficult to manage the account. Disagreements over the account could damage the relationship between account holders. It might be difficult to find someone to open a joint account with you if you do not have a spouse or if your spouse does not want to combine finances. Not all lenders provide joint credit accounts, so options for opening a joint account are limited. Many joint accounts do not provide the option of removing a joint account holder, so both users are often attached to the account permanently unless they decide to close it altogether.
Authorized user credit piggybacking is one of the fastest ways to build credit. Photo via seniorliving.org.
How to Build Credit Fast as an Authorized User
You’re probably already familiar with the concept of piggybacking credit as an authorized user. The classic example is parents who add their children as authorized users of their credit cards for the purpose of helping them build a credit history. Often, the young adult does not even get a credit card, so they can’t make charges to the account—the goal is solely to have the account show up on their credit report.
Pros:
The account can show up on the authorized user’s credit report as soon as the next reporting date for that credit card, which means it can build your credit fast. Only the primary account holder is responsible for the debt incurred, not the authorized user. Only the primary cardholder’s credit file is considered when the credit card company issues the card. Therefore, many times, an authorized user may be added to the account even if their credit is not as pristine as the primary cardholder. The authorized user’s credit score does not affect the credit of the primary cardholder (as long as the authorized user does not increase the utilization of the account by making charges). Being an authorized user can be a great way to build credit fast, since the full history of the account is often shown in the credit reports of both the primary cardholder and the authorized user, regardless of when the authorized user was added (with some exceptions depending on the bank). The authorized user can remove themselves from the account if they no longer want the account to appear on their credit report, such as if the account becomes delinquent.
Cons:
Authorized users don’t have the ability to make changes to the account like the primary cardholder. The primary cardholder does not even have to give the authorized user a credit card. If the account shows any negative behaviors such as a late payment or high utilization, this will be reflected on the authorized user’s credit report, which may be counterproductive to the goal of building credit. If you buy an authorized user tradeline from a reputable company, however, the tradeline should have a perfect payment history and low utilization.
What Is the Best Way to Build Credit Fast?
While there are many ways to increase your credit score quickly, not all of them are conducive to building credit, which means strengthening your credit profile with additional accounts.
Credit repair techniques may promise to boost credit scores fast, but removing information from your credit report doesn’t help you build credit. To truly build or rebuild credit, you need to add positive credit history to your credit report.
Building credit for long-term success involves establishing a mix of different credit accounts, including credit cards and loans. These foundational accounts, with time, will aid in boosting your credit score to its highest potential.
However, if you need to build credit fast, you’ll have to take a different approach. Primary accounts need time to age and accumulate positive payment history before they can start to increase your credit score. And if you are starting with bad credit or no credit at all, it can be hard to get approved for credit accounts on your own.
The only shortcut we have seen to building credit fast is piggybacking credit. Through credit piggybacking, you can benefit from someone else’s good credit, whether that is by getting a cosigner to sign on with you, opening a joint account with someone, or becoming an authorized user on an existing account.
While the first two options are still restricted by the limiting factor of time, being added as an authorized user to a seasoned account can add years of positive credit history to your credit report almost instantly.
Therefore, if you need to build credit fast, consider adding one or more authorized user accounts to the mix, whether by asking a trusted family member or friend or purchasing them online from a reputable business.
Have you tried any of these ways to build credit fast? Share your experience with us in the comments!
The worst thing that can happen after you buy tradelines is not seeing your tradelines post to your credit report. Hopefully, your tradeline company offers a money-back posting guarantee, but of course, it’s better to have your tradelines post successfully the first time around.
Fortunately, there are a few things you can do to make sure everything goes smoothly when you buy tradelines. Here are our pointers on how to get tradelines to post.
1. Remove all fraud alerts and credit freezes from your credit report
Fraud alerts, credit freezes, and any other types of blocks on your credit file prevent new information from being added to your profile. This includes authorized user tradelines. Therefore, if you have a credit freeze, fraud alert, or some other type of block on your credit file, your tradelines will not post.
Before buying tradelines, make sure to contact the credit bureaus to remove any fraud alerts, credit freezes, or other blocks on your credit report so that new AU tradelines will not be blocked. Ideally, it’s best to wait about 30 days after removing all blocks to make sure that your credit file is completely clear.
2. Plan ahead and purchase your tradelines in advance
Try to plan your tradeline purchase ahead of time so you don’t miss the purchase by date.
Each of our tradelines has its own reporting period and corresponding “purchase by” date, which is the date by which you must purchase the tradeline in order for it to report on time. The purchase by date is typically 11 days before the reporting period begins in order to allow enough time to process your payment and add you as an authorized user to the tradeline.
Therefore, if you wait too long and the purchase by date has already passed for the current month, your tradeline may not post until the next reporting period a month later.
For this reason, it’s best to plan your purchase ahead of time so that you can be sure to purchase your desired tradelines before the purchase by date. Those who wait until the last minute to buy tradelines are limited to the tradelines with the soonest purchase by date.
Alternatively, some people are in such a rush to get tradelines that they don’t even pay attention to the purchase by date, and they don’t realize that they may have just purchased a tradeline that is not due to post for another month.
In order to ensure that your tradelines post in a timely manner, make sure to purchase them before the purchase by date.
3. Consider buying more than one tradeline as a safety precaution
While we offer a money-back guarantee in the case of a non-posting, unfortunately, non-postings inevitably do happen from time to time due to incorrect reporting by the banks and credit bureaus, which we have no control over.
If you need your tradelines to post within a specific time window and cannot wait for an exchange to be processed in the event of a non-posting, it is safest to hedge your bets by buying more than one tradeline.
Additionally, when buying multiple tradelines for this reason, you may want to choose tradelines from a few different banks. That way, if there is a problem with one particular bank, it will not prevent the rest of your tradelines from posting.
4. Choose a tradeline company that only works with the best banks and has the highest posting success rate
When it comes to tradelines posting, not all banks are equally effective. Some banks report authorized user accounts much more reliably than others. In fact, we only work with a select few banks that we have rigorously tested and found to have the best posting success rates.
Almost all the other tradeline companies out there work with many more banks than we do, which may sound like a good thing, until you consider the fact that most of these banks don’t report authorized user tradelines very well. Therefore, if you buy tradelines from these companies, there is a much higher chance of your tradelines not posting.
You’ll want to stick with the most reliable banks and tradeline companies to minimize your risk of a non-posting occurring.
5. Avoid buying tradelines from banks you may be blacklisted from
Sometimes, banks may “blacklist” certain customers that have a derogatory history with them, such as bankruptcies or collection accounts. If you have been blacklisted from working with a particular bank, this could prevent any tradelines from that bank from posting to your credit file, so you would want to choose tradelines from other banks to ensure successful posting.
If you are not sure about your status with a bank, but you have a collection or bankruptcy with them, it’s a good idea to avoid that bank as a precaution.
6. Use the correct address that is on file with the credit bureaus
Make sure to use the correct address when ordering tradelines.
The banks and credit bureaus use certain data points to verify the identity of the authorized user, and one of the most important data points is the AU’s address.
If you do not use the correct address that you have on file with the credit bureaus, they may not be able to match the tradeline with your credit profile, and this can prevent the tradeline from posting.
Before buying tradelines, check your credit report with each credit bureau to verify that they have your correct address on file, and be sure to use this same address when placing your tradeline order.
7. Avoid “address merging”
As we mentioned, most tradeline companies sell tradelines from many different banks, including banks that don’t report AU data very well. Because tradelines from those banks don’t post well, most companies engage in a questionable practice called “address merging” to try to get the tradelines to post more often.
Address merging is the practice of falsely claiming that the authorized user lives at the same address as the primary cardholder. This allows the account to be matched up to the AU using the shared address as an identifying data point.
While this strategy may improve their posting rates, we do not recommend this dangerous tactic, because lying about one’s address for financial gain is considered fraud and it could get you in trouble with the law.
It is important to be aware that some companies may be doing this without your knowledge and some may not even realize that they are getting their clients involved in fraud. When choosing a tradeline company, keep in mind that if they sell tradelines from a lot of different banks, it is likely that they participate in address merging.
Instead of getting involved in the risky practice of address merging, follow all of the other steps in this article to increase the odds of your tradelines posting as much as you can.
8. Triple-check your order information for errors before submitting your order
Before finalizing your purchase, go over your information again and make sure it’s free of errors.
While your address is a particularly important data point when it comes to the credit bureaus, it’s also important to make sure the rest of your personal information is correct when placing your tradeline order.
Unfortunately, some people submit their orders with typos or misspellings, and each error increases the odds that something could go wrong.
For example, sometimes people even enter their own name incorrectly! Obviously, if the name you provide with your order is not your actual name, then that can definitely increase the chances of your tradeline not posting because the credit bureaus may not be able to match the tradeline to your credit file.
There’s nothing more frustrating than having a non-posting occur simply due to a preventable user error. To ensure this doesn’t happen to you, before placing your order, look over your information and double- and triple-check it for accuracy.
We hope these tips on getting tradelines to post were helpful to you! Let us know what you think by leaving a comment below.
Did you know that a large proportion of consumers have errors on their credit reports? Unfortunately, it’s true. In 2017, the most common complaint received by the Consumer Financial Protection Bureau (CFPB) had to do with incorrect information being reported on consumers’ credit reports.
A study conducted by the FTC in 2012 found that about 25% of consumers had at least one error on one of their credit reports. Some of those consumers were paying higher interest rates on loans as a result of those errors bringing down their credit scores.
From this information, you can see that it’s all too likely that you may have an error in your credit report. Let’s go over some of the most common types of credit report errors and how to fix errors on your credit report.
How to Get Your Credit Report
The first thing you will need to do in order to identify errors on your credit report is, of course, obtain a copy of your credit report.
You can get your credit report for free from annualcreditreport.com, which is the only website authorized by the government to provide your annual free credit report.
Under the Fair Credit Reporting Act (FCRA), you are legally entitled to receive one free credit report from each of the three major credit bureaus once every 12 months. You can choose to order all three credit reports at the same time or order each individual report at different times throughout the year.
Watch out for other websites claiming to offer free credit reports or free trials, especially if they ask you for payment information.
However, there are some reputable websites where you can view a simplified version of your credit report for free, such as CreditKarma, CreditSesame, WalletHub, and Bankrate. They are able to offer this service by advertising credit products to users.
Inspect your credit report regularly to catch errors early.
You can also request a free credit report if you are denied credit because of information found in your credit report. The credit report must be from the credit bureau that provided the original report to the lender.
In addition, you can qualify for an additional free report if you are unemployed and planning to apply for jobs, if you receive government assistance, or if you are a victim of identity theft.
Credit experts recommend checking your credit reports at least once a year, so make sure to take advantage of any opportunities to get a free copy of your credit report.
You can also pay to get your credit reports directly from the credit bureaus.
Types of Credit Report Errors Identity Errors
Your personal information is not accurate. For example, your name is misspelled or your address is incorrect. This is an indication that the credit bureau may be confusing you with another person. This can sometimes happen with family members who have similar names or live at the same address. Your file has been mixed with someone else’s. If you see accounts on your credit report that belong to someone else who has a similar name or the same address, this could mean that your credit report has been merged with another person’s report due to having similar personal information. There are accounts that you didn’t open. Accounts that you know you didn’t open but are listed in your name indicate that someone has stolen your identity and used it to fraudulently open accounts.
If there are accounts in your name that you didn’t open, your identity may have been stolen.
Account Information Errors
Accounts are reported more than once (duplicate accounts). Sometimes, the same account may be shown twice on your credit report. This can definitely hurt your credit if it’s a derogatory account that’s been duplicated. An account reports that you are the primary owner of the account when you are actually an authorized user (or vice versa). It’s possible that the credit bureaus have mixed up who is the primary owner of the account. Closed accounts are reporting as open (or vice versa). Sometimes, accounts that you have closed in the past will still be reporting as open. This can be problematic especially if it’s a negative account, such as a collection. On the other hand, if an open account is reporting as closed, that’s also a problem because it can hurt your utilization ratio. There are late payments on your report, but you were on time. Late payments are highly damaging to your credit score, so if you’ve never been late paying your bills but your credit report indicates otherwise, that’s an error you’ll want to correct as soon as possible. An account has an inaccurate open date or date of first delinquency (DOFD). If an account has an incorrect open date, this could change the age of the account, which could, in turn, impact your credit score. An incorrect DOFD on a derogatory account, such as a collection account, will affect when the negative mark falls off your credit report. Accounts show incorrect balance or credit limit information. Some credit cards do not report a credit limit at all, which could hurt your credit utilization ratio. Alternatively, your credit report may not be showing the correct balance or credit limit, which could also potentially hurt your utilization.
Clerical Errors
Inaccurate data was added back into your credit report after being corrected. If you’ve corrected an error on your credit report but then see the same error pop back up again, it could be a clerical error on the part of the credit bureaus or the data furnisher. Duplicate collection accounts with different debt collectors are all being reported as open accounts. As we explained in our article on collections, this situation is called “double jeopardy” on your credit report. If an account has been sold to a debt collector, there may legitimately be multiple accounts for the same collection on your credit report, but the original account should be updated to show that it has been transferred and should no longer show a balance owed. The collection agency that currently owns the debt should be the only entity reporting the collection as open with a balance owed. There is negative information on your credit report that is more than seven years old. Negative information must be removed from your credit report seven years after the date of first delinquency, so if any derogatory information on your credit report is older than seven years, you can have it deleted.
How to Fix Errors on Your Credit Report
To get the best results, write a letter for each dispute and send your letters by certified mail.
If there are any errors on your credit report, you can contact the credit bureau that is reporting the inaccurate information to resolve the issue. Your credit report should contain information on how to file a dispute.
1. Gather All Necessary Information and Supporting Evidence
When you submit your dispute, it’s important to provide all the information the credit bureau will need to process your claim.
This may include the following:
An annotated copy of your credit report (circle or highlight the incorrect item) Documentation to verify your identity (copies, not original documents) A letter containing additional information about the item, an explanation of why it is incorrect, and a request to update or remove the incorrect item Copies of supporting documents that provide proof of the item’s inaccuracy
2. Submit Your Credit Dispute Letter Via Certified Mail
Although it is possible to dispute credit report errors online, many credit experts recommend instead writing a letter and sending it in the mail along with documentation to verify your identity and supporting evidence.
If you try to dispute an error online or over the phone, you may not have the chance to provide enough supporting evidence, and the credit bureau may dismiss your dispute as frivolous.
It’s also recommended that you send your letters by certified mail so that you have proof that the letters have been received. In addition, it’s a good idea to keep copies of your correspondence in case you need to get outside help.
3. Send a Separate Dispute Letter for Each Error
If there is more than one error on your credit report to deal with, it is best to send a separate letter for each dispute, since the credit bureaus may reject long lists of disputes as frivolous.
4. Consider Working With a Reputable Credit Repair Company
Annotate each error in your credit report and provide documentation supporting your dispute.
If you have a lot of errors to dispute or if you have been the victim of identity fraud, you may consider hiring a credit repair service to assist with the process. [Disclosure: This article contains affiliate links.]
5. Contact the Furnisher of the Incorrect Data
You should also contact the lender that furnishes the data to the credit bureaus to ensure the inaccuracy gets corrected at the source. The FTC also provides a sample dispute letter to send to data furnishers.
If you neglect this step, the error could show up on your credit report again the next time the lender reports to the credit bureaus.
6. If Your Identity Was Compromised, Consider Placing a Credit Freeze or Fraud Alert on Your Profile
If the error on your credit report was the result of identity theft, it might also be a good idea to contact the credit bureaus to place a fraud alert or credit freeze on your account.
A fraud alert requires lenders to take extra steps to verify your identity if someone is trying to open an account in your name, whereas a credit freeze blocks anyone from viewing your credit file except for businesses that you have existing relationships with.
Keep in mind that if you are planning to buy tradelines, you must have all fraud alerts and credit freezes removed first, or the tradelines will not post.
What Happens Next?
Once the credit bureau has received your dispute, they have 30 days to investigate your claim. If their investigation cannot verify the information on your credit report, they must update it with accurate information or delete the item.
In addition, the credit reporting agency is required to provide you with written documentation of the results of the investigation.
You are also entitled to get a free copy of your credit report from the company if your credit report has been changed as a result of the dispute. This free copy is not counted as one of your annual free credit reports from annualcreditreport.com.
Upon your request, the credit bureau must notify any entity who pulled your report in the past six months about the corrections made to your report. If anyone has pulled your report for employment purposes in the past two years, you can ask to have an updated copy of your report forwarded to them as well.
What To Do If You Disagree With the Dispute Results Option 1: Add a Consumer Statement to Your Credit File
If your dispute is rejected and you don’t agree with the credit bureau’s decision, you have the option of adding a consumer statement to your credit report to explain the situation. However, this is not necessarily the best solution.
Firstly, the statement doesn’t get factored into your credit score, so it won’t help your chances when a lender uses an automated system to approve or reject applicants. If it’s a case where an underwriter is looking at your credit report, adding a consumer statement may just draw their attention to a negative item unnecessarily, especially if the item is older.
Option 2: File Another Dispute With Additional Information
Another option is to submit a second dispute with additional supporting documentation to try to get the credit bureau to investigate the dispute a second time.
Option 3: Submit a Complaint to the CFPB
If the credit bureau still fails to correct the information in your credit report, you can submit a complaint to the CFPB.
The CFPB may not be able to force the credit bureaus, as private companies, to do anything, but getting a government agency involved might encourage the credit bureau to rethink their position.
Option 4: Take Legal Action
Continuing to report inaccurate information after you have disputed it is a violation of the FCRA. If you feel that a credit bureau is violating your rights under the FCRA, you have the option of talking to a lawyer about potentially taking legal action.
Conclusions on Credit Report Errors
Unfortunately, errors on credit reports are very common, so we all need to be vigilant about monitoring our credit for fraud and inaccuracies.
Make sure to check your credit reports regularly by claiming your annual free credit reports as well as using a reputable free or paid service throughout the year. As soon as you spot any errors, try to get to the bottom of them and get them corrected both with the credit bureaus and with the data furnishers as soon as possible.
By making sure that your credit report only contains accurate and timely information, you are helping to protect your financial health and ensuring that credit report errors don’t stand in the way of future opportunities.
Use our list of common mistakes below to make sure you get the most out of your authorized user tradelines. Don’t make the same mistakes we’ve seen before!
1. Having fraud alerts or credit freezes on your account
If you have fraud alerts or credit freezes on your account, new tradelines simply will not post on your credit report.
Fraud alerts essentially freeze your account, so new information cannot be added. If you have fraud alerts on your credit file, you must contact each credit bureau directly to have the fraud alerts removed before you will be able to add new tradelines to your file.
2. Not knowing how tradelines work
The most important factor in purchasing tradelines, in our opinion, is to understand how tradelines work. Without this understanding, it is easy to let commissioned salespeople lead you astray and sell you tradelines that are not the best for your particular situation.
If you are new to tradelines, then be sure to check out our Tradelines 101 infographic for a crash course on the basics as well as the large library of educational articles in our Knowledge Center.
3. Not understanding how credit scores work
Before buying tradelines, it is vital to have a general understanding of how your credit score works. There are tons of useful resources online that can walk you through what factors affect your credit score, such as our guide to building credit with tradelines. Knowledge is power, and understanding how credit scores work is worth the investment since your credit score can affect everything from your finances to your job.
The power of a tradeline does not necessarily depend on its price tag.
4. Judging the power of a tradeline strictly by price
When buying tradelines, putting price first is not wise. It is easy to assume that the more expensive a tradeline is, the more powerful it is, but this is not always the case.
For example, someone with a very established credit profile might look at a $1,000 tradeline and just assume that it is the one they want. However, if that $1,000 tradeline does not significantly improve their current average age of accounts or lower their already low utilization ratios, it may not have very much of an effect, or it could even hurt their credit!
Simply adding more of what you already have is not necessarily an improvement. Our Tradeline Calculator is the perfect tool to calculate where your numbers currently stand and how they may be affected by new tradeline data. Make sure to only select tradelines that will actually help you.
5. Not realizing that the power of a tradeline is always going to be relative to what is in your credit report
The power of tradelines is always going to be relative to what is already in your credit file.
For example, if your average age of accounts is already 10 years old, an 8-year-old tradeline may not necessarily help you very much, since you are not improving that variable.
On the other hand, if someone’s average age of accounts is only 1.2 years old, an 8-year-old tradeline may be more powerful for that person. Tradelines do not affect people in the exact same way because everyone’s credit file is unique.
For more information on choosing the best tradelines for your particular situation and goals, our buyer’s guide to choosing a tradeline is a valuable resource.
6. Relying strictly on buying tradelines
It is not smart to rely only on purchasing authorized user tradelines when building or rebuilding credit. In general, tradelines that you can purchase are usually authorized user positions on credit cards, which are revolving accounts.
While this can be very powerful, almost all credit scoring models will take into account your total mix of credit, and it is more favorable to have a good mix of different kinds of credit accounts.
Some additional examples of different types of credit accounts may include auto loans, mortgage loans, installment loans, etc. Having a good mix of credit types is ideal. For more detailed information on how to optimize your credit mix, check out our article, “Credit Mix: Do You Need to Care About Types of Credit?“
In addition, if your credit report has delinquencies such as collections or late payments, tradelines may not solve your problems. You may need to consider repairing your credit before adding tradelines or in tandem with your tradeline strategy. [Disclosure: This article contains affiliate links.]
The age of a tradeline, also referred to as “seasoning,” is often even more important than its credit limit.
7. Valuing limit more than age
Many people initially focus only on how large of a credit limit a tradeline has. They often think that the tradeline with the largest credit limit is automatically the best tradeline.
For example, they might ask, “Should I get the $30,000 tradeline, or do you think the $20,000 one is enough?” However, this question is flawed from the start.
As a real-life example, it is not uncommon for someone to open a new credit card (possibly with a high limit) and that person’s credit score drops initially. Perhaps the reason the person’s score goes down is a new account has no payment history and may pose a higher risk in the eyes of the credit bureaus until a pattern of on-time payments is established. In this example, a new high-limit primary account actually made their credit score go down initially.
It could be the case that a tradeline with a $1,000 limit is actually the best for them because maybe that one has a lot of age and meets their strict budget. Everyone should consider the age and the limit together when buying tradelines and use the Tradeline Calculator as the first step in assessing your situation.
8. Buying cheap tradelines as a test
Some people will use the strategy of buying a cheap tradeline to see what that does first, and if it works a little, then they will buy a better one next time. We feel this strategy is a mistake.
For one, it ends up costing more in the long run, because now they have to buy two tradelines (one cheap one and one better quality one) when the person would probably be better off just getting one high-quality tradeline to begin with.
Also, buying that cheap tradeline may be working against the goal of improving the average age of accounts because in general, cheap tradelines do not have very much age. So when you add a tradeline with little to no age and then later add a tradeline with age, the first tradeline with little to no age ends up lowering the average age of accounts, thus making it more difficult to improve that average.
Calculating your average age of accounts is crucial when choosing the best tradelines for your credit file.
9. Not doing the math on the average age of accounts
You would be surprised to find how difficult it is to significantly change an average, especially when there are multiple accounts in the equation.
As an experiment, imagine there are 5 accounts that are all 2 years old so the average age of accounts is 2 years old. Now guess how old a new 6th account would have to be in order to make the average age of accounts be 5 years old. (Take some time to guess this answer.)
The answer: 20 years old! Seriously, do this math. 2 + 2 + 2 + 2 + 2 + 20 = 30 divided by 6 accounts = 5 years average age of accounts. The easiest way to do the math for yourself is by using our Tradeline Calculator.
Even most “experts” at other companies do not do this math correctly and often guess wrong, and therefore give bad advice to customers as to which tradelines to buy.
10. Not getting old enough tradelines
If you look at the example above, you will see how easy it is to underestimate how old of a tradeline you may really need in order to significantly improve your average age of accounts. Age is essential. Do not underestimate how difficult it is to significantly change an average. Use the Tradeline Calculator to know for sure.
11. Not buying your tradeline far enough in advance before the reporting date
When you place an order for a tradeline, there is a processing time in order for the tradeline company to receive the funds. For example, with our eCheck payment method, it may take up to 5 business days to receive the funds.
Then, the credit partners have up to two days to add the authorized user. The credit card company may then have their own processing time for updating their records internally. Next, the banks update the credit bureaus, and finally, the credit bureaus publish their records.
For this reason, our “Purchase By Date” is typically around 11 days prior to the beginning of the reporting period. So as long as you purchase the tradeline by the Purchase By Date, we guarantee that your tradeline will post in the next reporting cycle.
12. Urgently needing a tradeline to post, but only buying one tradeline and betting your entire outcome on that one posting
Our posting success rate is the highest in the industry, but even given this fact, credit report data is not always going to be perfect.
In other words, although rare, non-postings do occur, and if you are betting your entire outcome on the results of one tradeline, you may want to consider hedging your bets and buying two tradelines to be safe.
In short, two is often better than one for many reasons. If it is extremely critical to get a tradeline to post, it is safer to just buy two.
13. Buying tradelines instead of paying down your debt
If you have credit cards with high utilization, it is usually best to pay those debts down before buying tradelines.
Having credit cards with high utilization ratios is a negative factor in your credit report. This negative factor will always play a part in your overall credit picture as long as it exists.
The only real way to solve this problem is to pay down your credit cards. You should do the math using our Tradeline Calculator to see where your money is better spent, but in general, paying down your debt is usually the best advice.
14. Thinking tradelines will fix high utilization
Tradelines should not be thought of as the solution to high utilization on your credit cards. While tradelines can affect your overall utilization ratio, having individual cards with high utilization will still be a factor in your overall credit picture.
In other words, you should not only take into account your overall utilization ratio, but also the individual utilization of each of your credit cards and the number of cards that have high utilization vs. low utilization. Again, the solution to the problem is paying your cards down.
15. Not factoring in closed accounts when calculating your average age of accounts
Many credit scoring models factor closed accounts into their equation. For example, some people with zero open accounts can still have a good credit score. Clearly, the closed account data is still part of the equation.
If you end up needing your tradeline to stay active on your credit report for longer than two reporting cycles, you don’t have to buy a whole new tradeline when the time is up. We offer unlimited extensions in 1-cycle increments at half the cost of the original purchase price.
Simply let us know at least 2 weeks before the scheduled removal date if you’d like an extension.
Make sure to use trusted platforms that provide secure online transactions.
17. Buying tradelines from an unethical company
Unfortunately, in this industry, it can be hard to know who to trust. It is essential to do your research and choose a company you trust so you don’t waste your money on low-quality tradelines, tradelines that don’t post, or tradelines that are overpriced.
You also need to be sure to only use reliable platforms that provide secure online transactions. Warning signs that could indicate that a company lacks integrity include fake reviews, unavailable or poor customer service, and websites that are not secure or do not look professional.
18. Asking what the average boost of credit score is
We do not guarantee any boost of your credit score and we also cannot say what the average credit score boost from tradelines is. Tradelines affect everyone differently. One tradeline may help one person while that same tradeline may hurt another, and have no effect on someone else.
All tradelines will be relative to what you already have in your credit file. There is no meaningful average effect of tradelines in general.
Although we do not guarantee any boost of your credit score, often when we hear a variation of the following question. The request goes something like this… “I currently have a 520 credit score but I want to be over 700. What tradeline do you recommend to accomplish this?”
Again, we are unable to answer these kinds of questions, but in talking about this topic in general, who says that it is even possible to go from a 520 to over 700 anyway? Not us. (Although we are not saying it is impossible either.) We just do not advise on these types of credit score requests.
But going back to talking in general, if someone has a 520 credit score they probably have some serious derogatory accounts in their credit. If they have such derogatory accounts in their credit file, their credit score will probably not be a 700 regardless of what other tradelines may exist in their credit file. So in this example, the question itself is flawed, since it may be impossible to begin with.
Even in less extreme examples, no one knows the exact credit score algorithms, so no one can say with certainty. Therefore, it is best to not ask that question, because whoever answers that question is making a wild guess and they could easily be wrong and give you bad advice.
Steer clear of CPNs, which could get you caught up in felony identity fraud.
20. Buying tradelines for a CPN
We do not sell tradelines to those trying to use CPNs.
The reason for this is that the Social Security Administration and the Federal Trade Commission have both stated that CPNs are not legitimate and that the use of CPNs to obtain credit is fraud and a federal crime. We highly recommend avoiding any person or business trying to sell you a CPN.
21. Thinking that buying a high-limit tradeline automatically means that you will also get approved for a high-limit credit card
Having a high-limit authorized user tradeline does not automatically guarantee that you will get approved for your own high-limit credit card. Most banks that offer credit cards will typically also consider your income, expenses, credit score, and possibly several other factors relating to your ability to repay debt in order to make a decision on whether or not they are willing to extend credit to you.
22. Mistaking tradelines for credit repair
Buying tradelines is not credit repair. Credit repair seeks to correct inaccurate items on your credit report. If you have inaccurate items on your credit report, you definitely want to get those items removed. [Disclosure: This article contains affiliate links.]
If you have bad credit, you may need to fix your credit in order to get the maximum benefit possible from tradelines.
Occasionally we get a call from someone who might tell us that they are currently 90-120 days late on 2-3 accounts and their credit score is in the dumps. Can we help someone with extremely bad credit? The answer is probably no.
Again, we are not able to advise on credit scores (only general information) but in our opinion, if they are currently that far behind on bills and have multiple major derogatories on their credit report, there is no way they can have good credit without correcting the situation.
After all, a credit score is meant to calculate the likelihood of someone defaulting on a credit account, and if they are proving that they are currently in default, then their credit score is going to reflect that. The best advice is to pay those accounts current if they are trying to improve their credit.
24. Buying tradelines from the wrong banks that don’t post well
The truth is that most banks across the country do not post authorized user data very reliably. In other words, with most banks, the odds of a non-posting are very high.
Our company has tried out almost all of the common banks, and due to our high volume of tradeline sales, we have amassed a large amount of data. We know which banks post well and which ones do not. In fact, just about every other tradeline company out there sells tradelines from many more banks than we do.
The reason for this is not because we do not have that inventory available. It is because our integrity level when it comes to the reliability of our postings is so important to us.
The truth is that any company who sells tradelines from more banks than we do automatically has a higher non-posting probability and a lower integrity level. Saying it bluntly, we have the highest posting success rate in this industry because we only work with the best of the best banks that post the most reliably. All other tradeline companies have a lower posting success rate because they work with banks that are less reliable.
If you have a bankruptcy or collection with a bank, tradelines from that bank may not post for you.
25. Having filed bankruptcy with the bank you are ordering a tradeline with
It is possible that some banks will not work with a person if they have filed bankruptcy with that bank. They may be in a sort of “blacklisted” status with that bank.
This can also apply to authorized user positions. Therefore, if you owed a debt to a particular bank when filing for bankruptcy, it is best to choose a tradeline from a different bank as a precaution.
26. Having outstanding collections against the bank you are ordering a tradeline with
Similar to the point made above regarding bankruptcies, having outstanding collections with a certain bank could also pose an issue. The collection status is probably less of a risk of non-posting than the bankruptcy status, but it is still worth mentioning as a potential problem.
27. Thinking that primary tradelines are the best option
Since there are many different credit scoring algorithms, everyone actually has many different credit scores.
Often the main goal of someone shopping for tradelines is to eventually open their own primary accounts. However, we regularly get calls from people asking if we sell primary accounts. The answer is no, we do not.
Being the primary borrower on an account means someone extended credit to that individual and they are financially responsible for that account. In other words, that person is actually issued credit.
We know of some options within the tradeline industry where companies really will issue credit and that accomplishes the “primary tradeline” desire that some consumers have, however, they are usually relatively low limits, and of course, they have no age since it is a brand new account.
So is a primary account with a low limit and no age better than an authorized user tradeline with a high limit and lots of age?
From what we have seen, if we had to choose between these two scenarios above, we believe the authorized user tradeline with age and a higher limit would be the more powerful choice.
28. Not realizing that you have many different credit scores
Each major credit bureau has its own algorithms and reporting methods, and even within each credit bureau, there are many different versions of credit scoring models. Often, the score that is used depends on what kind of company is ordering the report.
For example, not only might your credit score be different at each credit bureau, but the score might also be different depending on whether you are applying for a mortgage, a credit card, a car loan, or trying to rent an apartment.
The credit scoring algorithm used might be one of many different versions of the FICO score, or it could be a VantageScore.
It is possible that each person has over 30 different credit scores. If you google “how many credit scores do I have,” you can read more about this.
The authorized user must use the correct address that is on file with the credit bureaus to ensure the tradeline will post.
29. Not using the correct address that is on file with the credit bureaus
When adding an authorized user to a credit card, it is important that the authorized user provides the correct address that is on file with the credit bureaus. The authorized user’s address is a data point that helps identify the person, and if that does not match up, there can be issues with the tradeline posting.
Check your credit reports to confirm that the address in your file is correct and then make sure to provide this same address when purchasing your tradelines.
30. Having no credit score at all
There are instances where some people do not have any credit score at all. There may be several reasons why this is the case.
For one, maybe the person just never had any credit at all. If this is the case, then getting a tradeline to post should not be a problem.
Another possibility is that the person had derogatory items on their credit report and participated in some sort of aggressive credit sweep or credit repair deletion service that essentially deleted everything from their credit report.
In these types of scenarios, getting a tradeline to post can be a problem. Sometimes there may be blocks on that person’s credit file that prevent the new authorized user account from posting.
31. Not having enough tradelines or having only authorized user tradelines in your credit file
As we mentioned, having a good mix of various credit types is important to building good credit. Therefore, you do not want your entire credit profile to be made up of authorized user tradelines exclusively.
In general, the best credit profiles belong to people who have multiple tradelines from a variety of different types of credit, including credit cards, auto loans, mortgages, installment loans, etc.
A tradeline alert is a notification that a new or updated tradeline has posted to your credit file. To set one up, you will need to sign up for a credit monitoring service.
We ask our customers to make an account with Credit Karma, a free online service that automatically notifies you when new accounts have been added to your TransUnion or Equifax credit report. Credit Karma is also how you will verify whether or not your tradeline has posted.
33. Entering your personal information incorrectly when placing an order
As we alluded to above, there are certain pieces of information that need to match up in order for a tradeline to post to your credit report, such as your name and address. In order for the banks and credit bureaus to verify your identity and link the tradeline to the correct credit profile, the personal information you provide when buying tradelines needs to be 100% accurate, or else there is a chance that your tradelines will not post.
Unfortunately, people often make mistakes when typing in their names and addresses, which can result in their tradelines not posting. Be sure to double-check all of your information for accuracy and correct any typos before placing your order to ensure that your tradelines post to your credit report.
Although we are proud to have the best posting rate in the industry, we can’t prevent the occasional non-posting because unfortunately, the banks and the credit bureaus are not always 100% accurate in their reporting processes.
If your Credit Karma credit report has been updated after the last date within the reporting period and your tradelines still haven’t posted, you can follow these instructions to request a refund or exchange for the non-posting tradeline.
When buying tradelines, use some best practices to get your tradelines to post so there is a lower chance of having to deal with a non-posting.
Still feeling unsure about tradelines? Check out our Tradeline FAQs.
What mistakes have you seen when it comes to authorized user tradelines? Are there any common mistakes that you would add to this list?
There’s never a bad time to start building good credit, but there is definitely a good time to start: as early as possible. The earlier someone starts building credit, the easier it will be to seek credit as an adult. The question is: at what age can you start building credit?
Whether you want to start building your own credit or whether you want to help your child get a head start on preparing for their financial future, this article is for you. We answer the questions of when you can start building your credit, how to build credit for a minor, and how to build your child’s credit.
Why You Should Start Building Credit Young
Obviously, most children and teenagers don’t have access to credit cards or other credit products, for good reason. However, this doesn’t mean that teens cannot or should not build credit. In fact, quite the opposite is true.
Let’s look at an example to understand why it’s important to start building credit even before turning 18. If you’re an adult and you’ve never used credit before, but you now need an auto loan, what do you think is going to happen when you go and apply for a loan?
Since you don’t have a credit history, chances are, you’re probably going to get denied. If you do somehow get approved for an auto loan with no credit, it’s likely going to have a very high interest rate since you will be perceived as a risky borrower.
The moral of the story is that you can’t wait until you need credit to start thinking about building credit. You need to start building up a positive credit history early on so that you can have that good credit to rely on when you eventually end up needing it.
Beyond the issue of having access to credit when you need it, having good credit may also be important when entering the workforce. Many employers conduct background checks and check the credit reports of prospective hires, and having a solid credit history will reflect positively on applicants.
Having already established good credit will also come in handy when shopping for insurance, applying to rent a home, setting up utilities, and maybe even buying a cell phone plan. All of these industries typically conduct credit checks on applicants before getting into business with them.
How Do You Start Building Credit?
To build credit, of course, you need to use credit products. This is why many people wait until they are well into adulthood to try to start building credit, which, as we just learned above, is a mistake because it can hold you back when you actually need to get credit.
However, we all know how difficult it can be to get approved for credit when you don’t have yet have a credit history that shows creditors that you can manage credit responsibly. Lenders don’t want to take on the risk of lending to someone whose future behavior is hard to predict.
Secured credit cards, which require a security deposit as collateral, can be one way to start building credit.
So how do you start building your credit without a credit history? One option is to apply for a secured credit card, which involves putting down a security deposit as collateral against the credit limit of your card. Lenders can issue these cards to consumers with no credit without taking on as much risk since they can keep the deposit if you default on payments. [Disclosure: This article contains affiliate links.]
Another strategy is to apply for a credit-builder loan, which works in the reverse order of a traditional loan: first, you make all the monthly payments toward the balance of the loan; then, once you have finished making the payments, you receive the loan disbursement.
Since you have already fronted the money, lenders don’t have to face the risk of you not being able to pay back the loan. Because of this, as long as you have enough income to make the monthly payments, your chances of getting approved for a credit-builder loan are very high.
There’s an easier way to start building credit, though. If you can’t get approved for any primary accounts on your own, or if you want a “shortcut” to building credit without having to wait for your primary accounts to age, you can build credit fast by piggybacking on someone else’s credit.
Piggybacking simply means becoming associated with someone else’s credit account for the purpose of building credit. There are three ways to piggyback, which you can also see in our infographic:
Get a cosigner or guarantor who can be held responsible for the debt if you cannot pay it. Open a joint account with someone who has good credit and can help you get approved for the joint account. Become an authorized user on someone else’s seasoned tradeline that is in good standing.
The first two of these three piggybacking methods involve opening new primary accounts, which means you have to wait a few years for the accounts to gain seasoning before they start to help your credit in a more significant way.
On the other hand, piggybacking as an authorized user means you can be added to an account that already has plenty of age and on-time payment history. That’s why it’s one of the most convenient ways to start building credit fast.
How to Help Your Child Build Credit
Teach your child about credit before they get a credit card so they don’t make the mistake of getting deep into debt.
Unfortunately, financial literacy is usually not emphasized in schools, so the responsibility of educating children about credit and helping them build credit falls primarily to parents and guardians.
It’s important to not only know how to help build your child’s credit but also to teach them the basics of financial literacy so that they will one day be able to manage their finances and their credit on their own.
Lay a solid foundation by teaching them about budgeting and saving. If your child is old enough to work, that can be a good opportunity to see how they manage their income.
Then you can move on to the world of credit. Your child needs to have an understanding of how credit works before getting a credit card or they could be headed for disaster.
In a survey of college students conducted by U.S. News in August of 2019, about 35% of students surveyed said they were not taught about fundamental financial topics before getting a credit card. A lack of understanding about how credit works and how to use it responsibly can easily lead to getting deep into debt and a lifetime of financial troubles.
In the same survey, 13% of students said they had over $8,000 in credit card debt, and almost 23% said they didn’t even know how much credit card debt they had. No one wants that to happen to their child, so make sure your kid knows how to use credit cards properly before they get one.
But beyond teaching your child the fundamentals of credit, can you build your child’s credit even before they get a credit card or loan of their own?
How to Build Your Child’s Credit Score by Piggybacking Credit
While helping them learn the ins and outs of the credit system, it’s also smart to help them get a head start on actually building credit via credit piggybacking, which means becoming associated with another person’s credit account.
If you have good credit, consider adding your child at an early age as an authorized user to one or more of your credit cards that are in good standing. If they’re not yet ready to use the account responsibly, you don’t necessarily have to give them access to a credit card. Alternatively, if you want to let them use a credit card, some credit card issuers may allow you to set spending limits for authorized users.
Piggybacking credit can help your child build credit early in life.
Being an authorized user on the account will still help them even if they don’t have spending privileges on the card. The positive payment history of that account will usually be reported on the authorized user’s credit profile, which can help kick start their credit score.
Unfortunately, according to the U.S. News study, about 75% of the college students that participated in the survey said they did not become an authorized user on someone else’s account before getting their own credit cards. That means they likely missed out on the lower interest rates and other perks that come with having an established positive credit history.
This statistic is not surprising. As we learned in our article, “What Happened to Equal Credit Opportunity for All?” equal credit opportunity is sadly not a reality in our country. Wealth disparities and historical discrimination prevent many Americans from being able to establish good credit and get ahead in life.
Those with wealth and financial education commonly used the authorized user piggybacking strategy to help their children build credit, while at the same time there are many young people who don’t have parents or loved ones that can help them establish credit. The tradeline industry helps to address this problem by providing access to authorized user tradelines to all consumers.
It’s clear that the authorized user strategy is an ideal way to help your child build credit. But when can you actually start building credit? Is there a minimum age requirement to be an authorized user? Can you start building credit before 18, for example?
At What Age Should You Start Building Credit?
It can be difficult for young adults to get approved for a credit card on their own since credit card issuers are required to check applicants’ income before issuing them credit. However, by using the authorized user credit piggybacking strategy, young people can start building credit earlier than you may think.
Minimum Age for Authorized User on Credit Card
Many credit card issuers have no minimum age requirement for authorized users.
A survey by creditcards.com revealed that half of the major credit card issuers surveyed, including Bank of America, Capital One, and Chase, had no minimum age requirement for authorized users! That means that with many of the most common credit cards, you can add your child as an authorized user at any age.
Credit card companies that do have age requirements, such as American Express, Barclays, Discover, and US Bank, typically impose a minimum age limit that is between 13 to 16 years old.
Check with your credit card issuers to see what the minimum age requirement is for authorized users on your cards.
In addition, check with your credit card issuers to see whether they report authorized user information to the credit bureaus since not all banks do. If you’re purchasing a tradeline, however, you don’t have to worry about that, since all of the banks we work with do report to all three major credit bureaus.
Conclusion
It’s a smart idea to help your child build credit early so they can start their adult life on a financially sound footing. If you have good credit yourself, the easiest and fastest way to build your child’s credit is by adding them as an authorized user to one or more of your credit cards that have a perfect payment history.
Kids can become authorized users at any age with some credit cards, while there is a minimum age requirement of 13 to 16 years with other cards. Check to see what your bank’s policy is.
Unfortunately, many people do not have access to this credit-building strategy. If you are one of those people, consider purchasing a seasoned tradeline when it comes time for your child to start establishing a credit history.
It’s never too early to start building good credit!
Did your parents teach you about credit at a young age? How do you plan to help your child build credit? Share your thoughts below!
Credit repair can be a long and arduous process, especially if you have very bad credit. Getting results from credit repair can take months, and it takes years to build or rebuild a solid credit history.
However, there are some “credit hacks” that you can use to improve your credit on a much shorter time scale.
In this article, we’re going to tell you the best credit hacks to improve your credit score as well as credit card hacks that work to help you save you money on interest. In addition, we’ll also provide some credit-building hacks for those with thin credit files and credit repair hacks to help you fix bad credit.
Here are the credit hacks we’ll be covering in this article. You can click on the bulleted list items below to jump directly to each hack.
Now let’s delve deeper into each credit of these credit hacks.
Credit Score Increase Hacks
Pay down high-balance cards first to improve your credit utilization
If your focus is primarily on boosting your credit score fast, you may want to consider paying down your high-balance cards first. The reason for this can be explained by the importance of individual credit utilization ratios, which refers to the utilization ratios of each of your revolving accounts.
From what we have seen, individual utilization ratios may be even more important than your overall utilization ratio. Having one or more maxed-out accounts, for example, can drag down your score even if your overall utilization ratio is low.
Therefore, by paying down your high balances first, you can get those accounts out of the high-utilization danger zone and into a utilization range that is less damaging to your credit score.
Pay off low-balance accounts to reduce the number of accounts with balances
One of the factors that are considered within the overall “credit utilization” category is the number of accounts that have balances. Having fewer accounts with balances is better for your score. In fact, the ideal credit utilization scenario is having a zero balance on all but one of your accounts and having one account with a utilization ratio in the 1-3% range.
Therefore, if you can pay some of your accounts down to zero, you should see a boost to your score. Accounts with small balances are low-hanging fruit because you don’t have to spend as much money to get them to a zero balance.
Time your payments so that you have a $0 balance on your statement date
To ensure that your credit report shows low credit utilization, time your payments so that you have a low balance (or no balance) when your accounts report to the credit bureaus.
When it comes to credit utilization, you might think that as long as you pay your credit card balance in full by the due date every month, then you should show a 0% utilization for that account. However, this assumption is not necessarily correct. The reason for this is that the date when your credit card issuer reports to the credit bureaus is often not the same as your due date.
That means that your account is reporting at some other time during the month when your card does have a balance on it. If you use a significant portion of your credit limit, that utilization could be hurting your score.
To correct this, if you want to have your accounts show a 0% utilization ratio, try using this credit hack: Instead of waiting for your statement to arrive and then paying your balance on the due date a few weeks later, you need to pay your balance to $0 before the statement closing date. Then, your statement will close with a $0 balance and that’s what will report to the credit bureaus.
Alternatively, you can pay your bill on your normal schedule and then refrain from using your card for the next entire billing cycle. Since you have paid off the balance and not made any new charges, your account will show a $0 balance at the end of the reporting cycle.
Either way, if you can shift the timing of your payments so that your account reports a 0% utilization, that could provide a significant benefit to the credit utilization portion of your credit score.
Credit-Building Hacks
Build credit fast by piggybacking on someone else’s good credit
One of the easiest and fastest ways to build credit is called credit piggybacking, which refers to the practice of becoming associated with someone else’s good credit for the purpose of helping you build your own credit history.
Piggybacking credit can help you build credit quickly, whether you open a joint account, get a cosigner, or become an authorized user.
There are three main ways to piggyback credit.
Get a co-signer or guarantor
Having a co-signer or guarantor with good credit can go a long way toward helping you qualify for credit because the co-signer or guarantor is essentially promising to assume responsibility for the debt if you default.
The downside of this strategy is that since the position of the co-signer or guarantor comes with a lot of risks, it can be difficult to find someone to take on this role for you.
Open a joint account
Since both applicants are considered when opening a joint account, you can benefit from your partner’s good credit as well as the fact that the income of both applicants can be counted. If you maintain the joint account for a while, this can allow you to build up a credit history with a primary account.
However, many banks no longer offer joint credit cards, so your options for opening a joint account may be limited. Plus, if your relationship with the other account holder ever takes a turn for the worse, it can make managing the account difficult, and you may end up needing to close the account altogether.
Become an authorized user
Becoming an authorized user on a seasoned tradeline (i.e. a credit account that already has at least two years of positive payment history associated with it) is the fastest way to build credit. Instead of opening your own primary account and waiting for it to age, you can add years of credit history to your credit profile within a few weeks or even days.
Consider applying for a credit-builder loan
If you have bad credit or if you have never used credit before, you might be feeling discouraged about the prospect of getting credit anytime soon. It can feel impossible to get credit if you have a thin credit file or a history of derogatory marks on your credit report.
A credit-builder loan can be a useful tool for those struggling to build credit. Here’s a summary of how they work:
Credit-builder loans are typically for small amounts (e.g. a few hundred to a thousand dollars). A credit-builder loan functions like a backward version of a traditional loan: instead of receiving the funds upfront and paying the money back later, you first make all of the monthly payments and then receive the loan disbursement once you have already paid off the loan. For this reason, these types of loans are low-risk for lenders, which is why even those with bad credit or thin credit can still qualify (provided your income is sufficient for you to make the monthly payments). The lender reports your payment history to one or more of the major credit bureaus, which allows you to build a credit history.
For more information on how these loans work and whether a credit-builder loan might be a good strategy for you to consider, check out our article, “Credit-Builder Loans: Can They Help You?”
Credit Card Hacks
Increase your credit limit
Increasing your credit limit is one of the best credit hacks. Check out our article for more tips on how to request a credit line increase.
Increasing your credit limit can be one of the easiest and fastest ways to boost your credit score. However, you’ll want to strategize a little before requesting credit line increases from your lenders.
If your financial situation has improved since opening your credit cards, it might be a good time to request a credit line increase. For example, if you have received a raise at work or your credit score has increased, that could indicate to lenders that you can handle a higher credit limit responsibly. Wait until you have been a responsible cardholder for at least six months and you don’t have too many inquiries on your credit report to make your request. Also, don’t request an increase if you have already requested one within the past six months. Check with your credit issuer to see whether they will need to do a hard inquiry or soft inquiry. If you don’t want to get a hard inquiry on your credit report, ask if there is an amount they may be able to approve without doing a hard pull on your credit. You can make your request for a credit limit increase online or over the phone. Be prepared to provide some financial information and to explain why you are asking for additional credit. Calling your bank and talking to a representative may give you more opportunities to negotiate than if you make the request online.
So, how does this hack improve your credit score?
Your credit utilization ratio, also called your debt-to-credit ratio, makes up about 35% of your FICO score and about 20% of your VantageScore. It’s defined as the ratio of how much debt you owe to the amount of credit you have available. This can be calculated for your revolving credit accounts in aggregate by adding up all of your balances and dividing by the sum of all your credit limits for those accounts.
Ask your credit card issuers for lower interest rates
This is another credit card hack that is easier and quicker than you might think. All you need to do is call up each of your credit card issuers and ask them to lower your interest rate.
Try calling your credit card issuers and asking for lower interest rates—odds are good that they will grant your request.
Again, you’ll want to do a little homework before asking for a lower interest rate. Research interest rates on cards from other issuers and see if your bank can match a lower number. Explain why you’ve been a good customer and why you feel your rate should be lowered. Also, describe how your financial situation may have improved since you opened the card.
You can find a detailed script to help you negotiate on creditcards.com.
Although this tip doesn’t directly affect your credit score, it can still be hugely beneficial, especially if you are one of the 37% of American households that carry balances on their credit cards from month to month.
Lowering your interest rate decreases the debt burden that comes from interest charges each month, allowing you to pay off your debt faster. Paying off your debt faster means improving your utilization ratio, which leads to a better credit score!
Although this hack isn’t guaranteed to work, the worst that could happen is that your lenders deny your request and your interest rates stay the same. On the other hand, it could save you hundreds or even thousands of dollars in interest. Plus, you can be optimistic about your chances: polls show that over three-quarters of consumers who ask for a lower interest rate are successful in their request.
Set up automatic bill payments
Setting up automatic payments is one of the best things you can do for your credit, especially if you struggle to remember due dates or if you have accidentally missed payments in the past. Payment history is the number one factor that influences your credit score, so even one late payment can have a serious impact on your credit.
Setting up automatic payments for all of your accounts can help prevent you from accidentally missing a payment.
Take human error out of the equation by setting up automatic payments for all of your loans and credit cards. That way, you’ll never accidentally miss a payment, so you can continue to build up a positive payment history each month without even thinking about it.
Pay down high-interest balances first to save money on interest and pay off debt faster
When it comes to paying off debt, the way to save the most money on interest is to pay off your high-interest balances first. This method is called the “debt avalanche” because you’re starting with the highest interest rates and working your way down from there. (In contrast, the “debt snowball” method involves paying your debt in order of smallest to largest balances).
Transfer your balances to a card with a lower interest rate
Another popular way to get some relief from paying those astronomical interest charges every month is to transfer your credit card balances to another credit card that has a lower interest rate.
This hack works best if you have good enough credit to qualify for a balance transfer credit card. These credit cards are marketed specifically for this purpose and they typically come with special introductory offers, such as 0% APR on balance transfers for a certain number of months.
A balance transfer can help you save money on interest charges and may improve your credit utilization ratio.
Here’s how the balance transfer process works:
When you apply for the balance transfer credit card, you tell the credit card issuer the amount you want to transfer and which bank(s) you want to transfer a balance from. Once you have been approved for the balance transfer card, the credit card issuer essentially pays off your balances at the other banks with the credit on your new card. Your debts (plus a balance transfer fee, usually around 3-5%) have thus been transferred to your new card. Since your balance transfer card likely has a low promotional interest rate or perhaps even zero interest for a while, you have some extra time to pay off your debt without being crushed by interest, which means you can pay off your debt faster.
As a bonus, this credit card hack can also help your credit utilization, because you are adding some available credit to your credit profile by opening a new account.
The pitfall to watch out for with this method is that it opens up the possibility of you running up your credit cards again and potentially ending up even deeper in debt than you were before. If you think having access to additional credit is going to tempt you to spend more, then it’s probably best for you to avoid this credit hack.
Credit Repair Hacks and Bad Credit Hacks
Dispute inaccurate information on your credit report (such as inquiries or derogatory items)
Check your credit report for errors that could be damaging your score and dispute them with the credit bureaus.
If you have any errors on your credit report that are bringing your score down, such as credit inquiries or derogatory items that don’t belong to you or are otherwise being reported incorrectly, then this hack could definitely give your credit a boost.
First, you need to obtain a copy of your credit report to check for errors. You can order one from each of the three credit bureaus for free once a year at annualcreditreport.com and you can order your Innovis credit report for free directly from their website.
Then, thoroughly check your credit report for any inaccuracies, such as late payments that you actually made on time, duplicate accounts, or negative information that is more than seven years old (which means it should have been deleted by the credit bureaus already).
To fix the errors on your credit report, you can dispute the items with the credit bureaus by following the instructions found on each of your credit reports. However, there are a couple of other things you should keep in mind in order to ensure your dispute process goes smoothly.
Look up a sample credit dispute letter, such as the sample letter offered by the Federal Trade Commission, that you can use as a model for writing your own letters. Write one dispute letter for each credit report error and send in your letters one at a time. If you try to dispute several items at once, you run the risk of the claim being dismissed as “frivolous.” Be sure to include as much evidence as possible that supports your claim when submitting your dispute. Without documentation proving that the item is being reported incorrectly, the credit bureaus could dismiss your dispute. Send your letters along with the necessary documentation via certified mail so that you can get proof that the bureaus received them. In addition, you should also talk to the creditor that is reporting the inaccurate date to the credit bureaus in order to fix the problem at the source and prevent the error from showing up on your credit report again in the future.
Once the credit bureaus receive your dispute letters, they have 30 days to investigate the issue. If they cannot verify the information to be accurate, then they have to either update the item with the correct information or remove the item from your credit report.
For this credit hack, dispute collection accounts on your credit report that are inaccurate or outdated to have the credit bureaus update them or delete the collections altogether.
As we discussed above, if a collection account on your credit report is being reported incorrectly or doesn’t belong to you, then you can certainly dispute the inaccurate information and have the credit bureaus update or remove the item.
If, on the other hand, the collection accounts on your credit report are legitimate, then your options for removing them are limited.
Some consumers try to negotiate a “pay for delete” arrangement with the debt collector, in which the debt collector agrees to stop reporting the collection to the credit bureaus in exchange for you paying some or all of the debt. However, this strategy is risky and it does not always work in the consumers’ favor. If you do try this approach, be sure to get the agreement in writing from the collection agency.
In addition, deleting a paid account might not even increase your credit score depending on which credit scoring algorithm is being used. Simply paying the collection may be enough to boost your credit score, since some scoring models (FICO 9, VantageScore 3.0, and VantageScore 4.0) don’t penalize you for having paid collections on your credit report.
If you want to delete a collection account without paying it, unfortunately, your only legitimate option is to wait for the collection to be removed from your credit report automatically, which happens seven years after the date that you were first delinquent on the account.
Time your credit inquiries carefully when shopping for credit
If you’re planning to shop for credit in the future, you’ll probably be getting some hard inquiries from lenders on your credit report.
Lenders typically need to check your credit history before they can decide whether or not to extend you credit, so when you apply for a loan or credit card, the lender will often request a “hard pull” of your credit report from one or more of the credit bureaus.
While it’s unlikely that inquiries alone will ruin your credit score, since each inquiry can potentially subtract a few points from your credit score, it is still important to be mindful of the frequency and the timing of your credit applications in order to minimize the impact of inquiries on your credit report.
Thankfully, though, you can still shop around for the best loan without being punished by the credit scoring algorithms. FICO and VantageScore know that it’s financially smart to shop for the best rates, not risky. Therefore, they each have ways of accounting for this behavior so that your loan applications don’t have an outsize impact on your credit score.
When applying for credit, try to minimize the impact of credit inquiries by grouping your applications within a specific time frame.
FICO scores group together inquiries that occur within a certain time frame for student loans, auto loans, and mortgages. Older FICO scores allow a 14-day window for consumers to apply for multiple loans of the same type (such as mortgages), while newer FICO scores allow a 45-day window.
Each inquiry for the same type of loan within the given time period gets grouped together and only counted as a single inquiry. However, note that this rule does not apply to credit cards, for which each inquiry will be counted separately.
With VantageScore, all inquiries that are made with a 14-day period are grouped together, regardless of the types of accounts—even credit cards.
To simplify this information into a general rule, if you can complete all of your hard credit inquiries for a given type of loan within 14 days of each other, then the inquiries will be grouped together and you can avoid ending up with way too many inquiries on your credit report.
Get a rapid rescore from your mortgage lender
Once you’ve tried some of these credit hacks and optimized your credit report, the fastest way to see your results reflected in your credit score is to get a rapid rescore. For those who are about to apply for a mortgage but need to quickly update their credit report first, a rapid rescore can be an extremely valuable tool.
To trigger a manual update of your credit report, obtain verification of your tradeline’s new status from your creditor and then forward the letter to the credit bureaus.
Since rapid rescores can only be provided by mortgage lenders, if you’re not in the market for a mortgage but you need to update your credit report in a hurry, you’ll need to update your tradelines manually.
To do so, once you have made the desired changes to your tradelines (e.g. paying down your balances or correcting errors), contact your creditors and ask them to send you a letter verifying the new account information. Then, forward this letter to the credit bureaus so they can update the information in your credit report.
By initiating the update manually, you can bypass the period of time that you would otherwise have to wait until your next reporting period.
Conclusions on Hacks to Improve Your Credit
While there is no substitute for the time and effort required to establish and maintain a respectable credit history, that doesn’t mean that you can’t try some of these credit-boosting hacks to help you improve your credit right away and perhaps even save some money on credit card interest and fees.
Just make sure not to lose sight of the most important goal, which is to build good credit over time and keep your credit report in good condition long-term.
Let us know what you think of these credit hacks! Which are the best credit hacks in your opinion? Do you have any creative credit hacks that you would add to this list?
Most of the time when I’m asked about credit scores the line of questioning is commonly about how to improve scores. It’s equally often, and equally enjoyable, when I receive questions from people about how many points certain things from your credit reports are worth to their credit scores. The questions generally go something like this… “How many points is a charge off worth” or some variation of that question.
Not only are these questions common but they are also reasonable. We grow up in an academic environment where questions on tests are worth a certain number of points toward our final grade. For example, if you have a test with 25 questions then each question is worth 4 points for a possible grade of 100. Credit scoring systems, however, are not designed such that entries on your credit reports are worth any specific number of points.
That’s Not How Credit Scores Work
If you ever read a book or blog or hear someone suggest that credit report entries are worth a specific number of points, you can ignore it because it’s factually inaccurate. Nothing on your credit report is worth any specific number of points, either positive or negative. Scoring models do not assign points like that because they’re not designed to do so.
Instead, credit scoring models assign points based on how well you have performed in certain credit scoring categories. Without getting highly technical and jargon-heavy, points are assigned based on how your credit reports answer questions asked by the credit scoring models.
Buckets, Bins, Variable Classing…They’re All the Same Thing.
Credit scoring models are made up primarily of three things…characteristics, variables, and weights. These three things can also be described as…questions, answers, and points. These three work in concert as part of the scoring process. Here is an example of how it works:
Characteristic (aka, a question asked by the scoring model)
Example: How many credit card accounts do you have with a balance greater than zero?
Variable/Bucket (aka, the answer from your credit report)
Example: I have 4 credit card accounts with a balance greater than zero.
Weight (aka, the points assigned by the credit scoring model based on the answer)
Example: If you have between 3 and 6 credit card accounts with balances, you earn 20 points. As such, because you have 4 cards with balances you have earned 20 points.*
*This fictitious example isn’t meant to mimic the points you’ll earn for having four credit card accounts with balances. It’s simply meant to illustrate how scoring models work.
The variable or “answer” component is also commonly referred to as a bucket or bin. It’s essentially a range where the answer to a credit scoring characteristic/question falls. And, the weight or points are assigned based on which bucket/range your answer falls.
I recognize that this is complex and it might take you a few times reading through this to understand how it works. But, at the very least what this should expose is the truth that no item on your credit report is worth “x” points.
Instead, the bucket/range where your answers fall is what’s worth the points. And, you may have several answers that would cause you to fall into the same bucket, meaning multiple consumers with different credit reports can have the same credit score.
In the above example, the variable bucket was “between 3 and 6 credit card accounts with balances.” And, that bucket was worth 20 points to your credit score. So, if your credit report had either 3, 4, 5 or 6 credit cards with balances your answer would have fallen in the same bucket and you would have earned the same 20 points.
This is precisely why the people who try to assign a specific value to any one credit report entry are universally incorrect. In this example, you would have earned an equal 20 points toward your score even if you had 4 different credit reports.
Your Never “Lose” Credit Score Points
Here’s another one that’s going to blow your mind. Your credit score doesn’t start out at a perfect 850 and then go down based on your credit reports. You instead start low and accumulate points.
Nothing on your credit report is worth negative points. So, collections are not worth negative 50 points. Charge offs are not worth negative 100 points. It doesn’t work that way. Your score doesn’t go down because of negative information, it just simply isn’t as high as it could be because you’ll accumulate fewer points during the scoring process.
If you have any of those negative items, like collections and charge offs, you would fall into a bucket that would be worth fewer points than you would have fallen into if you did not have those types of negative entries. That’s why people who have negative entries have lower scores, generally, than people who do not. They earn fewer points, rather than lose more points.
You can apply these examples to every scorable entry on your credit reports. This includes inquiries, the presence or lack of negative information, debt and debt-related ratios, the age of your credit report information, and the diversity of your credit report entries.
John Ulzheimer is a nationally recognized expert on credit reporting, credit scoring and identity theft. He is the President of The Ulzheimer Group and the author of four books about consumer credit. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has 27+ years of experience in the consumer credit industry, has served as a credit expert witness in more than 370 lawsuits, and has been qualified to testify in both Federal and State courts on the topic of consumer credit. John serves as a guest lecturer at The University of Georgia and Emory University’s School of Law.
Disclaimer: The views and opinions expressed in this article are those of the author John Ulzheimer and do not necessarily reflect the official policy or position of Tradeline Supply Company, LLC.
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