Best way to build credit?

[Derekd3408]

Long story short, my wife has no buying power with her credit. Her score is around 700, but since we married 14 years ago she has not been on one thing. I'm the only one on the house, cars, every bill, and she is authorized user on all my CCs.

So we got her a CC about 2 months ago and lo and behold, because we put 380 on it in chicago last weekend it dropped her score by 18 pts. "Using too much of her available credit limit". So I'm asking you financial geniuses of GIAOT for some helpful hints. TIA.

 

[SolarHawk]

Just keep using the credit card and pay it off on time every month. It will build up, just takes time.

 

[ANYCHawk]

What are you doing?

My wife (no pic) had no credit score before we met. We opened an account and i paid it off and put her as a authroized on my CC's. Within six months it was 780+

 

[hexumhawk]

Your first mistake was not having her on any of the bills. Change that first.

 

[millah_22]

Tell OP's mom to put it on the tab and make sure you pay it off every month.

 

[ButtersHawk]

From my understanding and this could be wrong but the 1st month of CC use your score will take a hit, the 2nd it will go back or close to even, the 3rd it will start to build. Of course meaning you pay on time

 

[BioHawk]

Long story short, my wife has no buying power with her credit. Her score is around 700, but since we married 14 years ago she has not been on one thing. I'm the only one on the house, cars, every bill, and she is authorized user on all my CCs.

So we got her a CC about 2 months ago and lo and behold, because we put 380 on it in chicago last weekend it dropped her score by 18 pts. "Using too much of her available credit limit". So I'm asking you financial geniuses of GIAOT for some helpful hints. TIA.

Just keep using it and keep paying it. Also, it might help to have her take out a loan on something and then pay it off regularly. Your credit score loves people that have loans and pay them on time (just not too many loans or creating too much debt). I'm sure people with a background in finance will be able to give you far better advice, but that's how I got my credit rating high.

 

[alaskanseminole]

Here are a few things she can do, one of which you're already doing.

1. Open a Credit Card Account in Her Name: Make small purchases and consistently pay them off to build credit.
2. Add Her as an Authorized User on Your Accounts: Ensure the accounts have a positive payment history.
3. Consider Joint Ownership on Loans: Add her to loans like a car loan or mortgage to establish credit.
4. Monitor Credit Reports Regularly: Check reports from all three major bureaus for errors or fraud.
5. Be Patient and Consistent: Building credit takes time and requires responsible financial habits.

 

[millah_22]

Just keep using it and keep paying it. Also, it might help to have her take out a loan on something and then pay it off regularly. Your credit score loves people that have loans and pay them on time (just not too many loans or creating too much debt). I'm sure people with a background in finance will be able to give you far better advice, but that's how I got my credit rating high.

Maybe. If you don't have any credit, or have bad credit, the rates may be high. I wouldn't try to go out of my way to spend money (interest) just to build credit.

 

[Derekd3408]

Just keep using the credit card and pay it off on time every month. It will build up, just takes time.

We have it set on auto pay, so that won't be an issue.

 

[kwik44]

It would really help if she was on the mortgage & auto loans.

 

[Derekd3408]

Your first mistake was not having her on any of the bills. Change that first.

I won't disagree. And if the next 10-20 years were certain I wouldn't even worry about building her credit. I can't change the past, just trying to get everything in order for the future.

 

[Sharky1203]

Win the lottery.

 

[alaskanseminole]

It would really help if she was on the mortgage & auto loans.

Crap! Overlord spotting.

 

[Sharky1203]

Start an Onlyfans account.

 

[Derekd3408]

Start an Onlyfans account.

Been trying to get her to do that for years. I'm hella good at running a camera.

 

[jawatkins]

Needs to be on the bills to build aged accounts. Needs to use a credit card and pay it off every month.

 

[BioHawk]

Maybe. If you don't have any credit, or have bad credit, the rates may be high. I wouldn't try to go out of my way to spend money (interest) just to build credit.

When I said a loan, I wasn't suggesting take out 200k loan. But maybe there is a home repair and you can find a 10k loan to help out with that. Interest rates might be a bit high on it, but if you are trying to build credit it could be chalked up as the price of doing business. That way if you ever do need the 200k loan you will hopefully get a much better rate.

 

[Sharky1203]

Been trying to get her to do that for years. I'm hella good at running a camera.

Lol, well I can't say I haven't thought about it with the GF. Big money in it.

 

[CoachH]

Long story short, my wife has no buying power with her credit. Her score is around 700, but since we married 14 years ago she has not been on one thing. I'm the only one on the house, cars, every bill, and she is authorized user on all my CCs.

So we got her a CC about 2 months ago and lo and behold, because we put 380 on it in chicago last weekend it dropped her score by 18 pts. "Using too much of her available credit limit". So I'm asking you financial geniuses of GIAOT for some helpful hints. TIA.

Apply for a limit increase on the card. If you are on with her, it shouldn't be hard to get approved. Ask for $5,000 limit, at least. That way even on the cycle of current purchases, it shouldn't affect the score that much.

Installment and especially mortgage loans are big score influencers. Next time you buy a vehicle or refi the house, have her on the loan. Even a 12 month same as cash carpet purchase would help.

This presupposes that all payments are made on time.

 

[millah_22]

When I said a loan, I wasn't suggesting take out 200k loan. But maybe there is a home repair and you can find a 10k loan to help out with that. Interest rates might be a bit high on it, but if you are trying to build credit it could be chalked up as the price of doing business. That way if you ever do need the 200k loan you will hopefully get a much better rate.

I wasn't particularly suggesting a 200k loan. Any loan taken out and payed off on a regular basis still acrues interest. Why pay extra cash just to build credit when a credit card will do the trick and earn cash back? Except maybe to expedite the process.

 

[hawkeyez]

Apply for a limit increase on the card. If you are on with her, it shouldn't be hard to get approved. Ask for $5,000 limit, at least. That way even on the cycle of current purchases, it shouldn't affect the score that much.

Installment and especially mortgage loans are big score influencers. Next time you buy a vehicle or refi the house, have her on the loan. Even a 12 month same as cash carpet purchase would help.

This presupposes that all payments are made on time.

This.

What is the limit on the CC? The credit bureaus don't like it when you are using too much of your available credit.

 

[StallmanCurse]

If she's an authorized user on all your CC's, she should have established credit. It would be helpful to know her existing credit age and credit limit.

Opening a new card will have a temporary negative impact due to a) lowering the credit age, and b) a hard inquiry (very minor if she doesn't have multiple inquiries).

 

[Derekd3408]

This.

What is the limit on the CC? The credit bureaus don't like it when you are using too much of your available credit.

500. When we applied it said up to 2500. She basically uses it for gas. But last weekend we put our hotel in Chicago on it.

I wasn't particularly suggesting a 200k loan. Any loan taken out and payed off on a regular basis still acrues interest. Why pay extra cash just to build credit when a credit card will do the trick and earn cash back? Except maybe to expedite the process.

Hypothetical here. If we were to take out an unsecured loan for a home remodel in her name, I assume with her credit the interest will be high, that doesn't kick in until the project is complete and just pay it off right away, would that do much for credit?


I should add that this doesn't need to be a quick process, so if just using a CC will continue to grow her credit, that should suffice.

 

[Funky Bunch]

Op, for future reference, add your kid as an authorized user when they are teens. My kids have a 25 year old AMEX on their credit history and they are all younger than that.

Can I add my child to my credit card?

Although you have to be 18 and show proof of income to get your own credit card, you can add your child as an authorized user to help them start building credit history.

www.usatoday.com

 

[BioHawk]

I wasn't particularly suggesting a 200k loan. Any loan taken out and payed off on a regular basis still acrues interest. Why pay extra cash just to build credit when a credit card will do the trick and earn cash back? Except maybe to expedite the process.

I see what you are saying now. Credit scores like it when you pay off multiple kinds of debt. In fact, in some cases I've taken out a loan and my credit rating actually improved because they like it when you are carrying some debt, but not too much. Interest rates on loans are usually far lower than credit card debt. I never carry credit card debt month to month because I don't want to carry debt that has 25% interest or whatever that particular credit card is doing. I'll stick with the 6% interest on the loan.

 

[ClarindaA's]

Been trying to get her to do that for years. I'm hella good at running a camera.

Same and same

 

[millah_22]

I see what you are saying now. Credit scores like it when you pay off multiple kinds of debt. In fact, in some cases I've taken out a loan and my credit rating actually improved because they like it when you are carrying some debt, but not too much. Interest rates on loans are usually far lower than credit card debt. I never carry credit card debt month to month because I don't want to carry debt that has 25% interest or whatever that particular credit card is doing. I'll stick with the 6% interest on the loan.

One time someone told me to let it roll over a month every once in a while and I've never understood why he thought that was a good idea.

 

[BioHawk]

One time someone told me to let it roll over a month every once in a while and I've never understood why he thought that was a good idea.

Probably because banks love it when you carry some debt. They make money that way and your credit rating will improve. I don't think there is a difference on what kind of debt you carry, but if there is a difference it isn't worth the ridiculous interest rates credit cards have in my opinion.

 

[millah_22]

Probably because banks love it when you carry some debt. They make money that way and your credit rating will improve. I don't think there is a difference on what kind of debt you carry, but if there is a difference it isn't worth the ridiculous interest rates credit cards have in my opinion.

Right. And I don't think its worth fussing over points once you get to say 815+. You're likely to get a good interest rate no matter what and it's not worth worrying over decimals for loan rates. At the end of the day there's not much difference between 3.10% and 3.15%.

 

[StallmanCurse]

One time someone told me to let it roll over a month every once in a while and I've never understood why he thought that was a good idea.

Probably because banks love it when you carry some debt. They make money that way and your credit rating will improve. I don't think there is a difference on what kind of debt you carry, but if there is a difference it isn't worth the ridiculous interest rates credit cards have in my opinion.

I'm not convinced paying credit card interest has a significant positive impact on your credit, but if it does, using a "balance transfer" deposit at 3% makes a helluva lot more sense than rolling over a balance at 25%.

 

[RollingBallofButcherKnives]

Get a bank loan and way overvalue your income and assets. I hear that works well…

 

[BioHawk]

I'm not convinced paying credit card interest has a significant positive impact on your credit, but if it does, using a "balance transfer" deposit at 3% makes a helluva lot more sense than rolling over a balance at 25%.

Anything beats what credit cards do. I'm pretty sure loan shark loans from mobsters don't carry the interest that credit cards do. Although I'm hardly an expert on under the table black market loans where they put a bullet through your head if you don't pay them back either so who knows.

 

[McLovin32]

Long story short, my wife has no buying power with her credit. Her score is around 700, but since we married 14 years ago she has not been on one thing. I'm the only one on the house, cars, every bill, and she is authorized user on all my CCs.

So we got her a CC about 2 months ago and lo and behold, because we put 380 on it in chicago last weekend it dropped her score by 18 pts. "Using too much of her available credit limit". So I'm asking you financial geniuses of GIAOT for some helpful hints. TIA.

Maybe you should spend less time getting OWI's and more time pumping up that credit, OP.

Signed,
Financial Advisor McLovin32

 

[TennNole17]

For those saying pay off CC each month- my “understanding” is carrying a small balance like 5% is the way to go, and constantly having a 0 balance is bad?

Edit: seems as good a place as any to ask- why do insurance companies use your credit when determining your rate (homeowner and auto)

 

[StallmanCurse]

Anything beats what credit cards do. I'm pretty sure loan shark loans from mobsters don't carry the interest that credit cards do. Although I'm hardly an expert on under the table black market loans where they put a bullet through your head if you don't pay them back either so who knows.

It blows my mind CapitalOne still offers 3% on balance transfers in the current interest rate environment. I thought about taking $20K on an unused CapOne card and arbitraging it in my CapOne savings account (currently 4.35%), but it seemed like a bit too much work for a couple hundred bucks and excepted rate cuts later this year would eat into my already modest return.

 

[BioHawk]

For those saying pay off CC each month- my “understanding” is carrying a small balance like 5% is the way to go, and constantly having a 0 balance is bad?

Edit: seems as good a place as any to ask- why do insurance companies use your credit when determining your rate (homeowner and auto)

Nothing is worth the interest CC charge. It might be a way to build credit in your 20's but once you start adding car loans and mortgages get out of credit card debt ASAP. You won't need that credit card stuff then.

 

[MitchLL]

I'm mystified why OP or his wife didn't do the joint accts 14 years ago?

 

[HawkeyeHitman]

Do what I do work hard and invest wisely. Then you don’t have to worry about your credit score.

 

[BioHawk]

I'm mystified why OP or his wife didn't do the joint accts 14 years ago?

In my experience, a joint account is one of the biggest sources of conflict ever. What's the advantage of a joint account?