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An effective method to improve your credit score is to have an open unsecured mastercard or visa. This card should carry a monthly balance of about 10% of your credit limit.

If you have an available credit line of $2,000 then you want to keep your monthly balance at $200. This will show the credit bureaus two positive things:

1. You do use your credit.

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

This means you have available credit that is not being used. The credit bureaus place a large emphasis on your available credit to debt when they calculate your credit score.

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.

If you have trouble getting approved for new lines of credit, then consider being added as an authorized user. Find a friend or relative with good credit and ask them 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 it is expected to take up to 8 years before this policy change will take effect. Thus you can still receive benefit from being added as an authorized user.

You will have all the information from this credit card account report on your credit too. If the account goes delinquent it can hurt your score, just like it can help your score. So choose your friend or relative carefully.

For you to be added as an authorized user, the account holder needs to call the credit card issuer and request you to be added as an authorized user. This can all be accomplished over the phone.

A credit card with your name on it is then issued and mailed to your home. I suggest giving this credit card back to the account holder. This way they assume no risk.

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

This method of building credit is in the process of being discounted. However for the time being it is by far the easiest and cheapest method to building positive credit.

Tags: Money

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