You can improve your credit score by having an open major credit card. On this credit card you should try and keep the monthly balance around 10% of your available credit line.
In other words if your limit is $1,000 then try to keep the balance around $100. This shows the credit bureaus two things:
1. Your credit is being used.
2. Your ratio of available credit to debt is good.
This second factor is very important to the credit bureaus when calculating your score. This is a way you can show that you do have available unused credit.
If you can show you have available credit your score will receive a bump. This tip is most effective with an unsecured credit card. However any revolving line of credit will help your score.
Another tip is if your credit is low and you have a friend or relative with a good credit score. Then ask this friend or relative to add you as an authorized user to their credit card account.
This is commonly referred to as piggyback credit. There have been recent reports that the credit bureaus are no longer going to give any credit score benefits to an authorized user.
However the credit bureaus are such large bureaucracies that this new policy will not take effect immediately. It is estimated that authorized user's credit score will still get a bump for the next 6-8 years.
Make sure to use good judgment when choosing a friend or relative. The account will show both positive and any negative information that can be reported. So if the account became delinquent it could hurt your score.
It is very easy to be added as an authorized user. The account holder calls the credit card issuer and says they want to add you as an authorized user. It can all be done over the phone.
You then will have a copy of the credit card with your name on it mailed to your house. I recommend returning the credit card to the account holder.
Then all the specifics about the account; payments, balance, limit will be reported on your credit too. This is a great way to show the bureaus that you have made on time payments and have available credit.
This method of building credit is in the process of being discounted. However for the time being it is by far the easiest and cheapest method to building positive credit.
