How can you increase the amount of credit you have while building your score?
A borrower has a Target and Macy’s credit card and they have paid it on time for the last three years. They want to increase the amount of credit they have and not get declined. How can the borrower do this and build their score?
Having an old average age of credit is excellent for credit scores. Credit age is considered the date of opening your first credit card, so this borrower would have a credit age of three years. Although they may have managed their three year old credit very well they’re still considered a higher risk due to youth and inexperience in the credit game.
The best way to boost credit scores in situations like this is to find an older trusted relative or friend that has great credit and would be willing to add you on as an authorized user. The credit card to pick would be one that is very old, active continuously, and has always been current with balances that have never been maxed out. Once it is reported to your credit that you are an authorized user on the account this can boost your scores significantly. Although you are not responsible for the account it will still be posted on your credit within a few months. Once it shows up, your average age of credit will become older and your scores should increase. Try not to do this with Amex cards since in many cases Amex shows the date the card was opened as the date it is posted on your credit. Master, Visa, and Discover usually show the same date the primary opened the account as the date it was opened on your credit as well.
Once the account is on credit you can buy your FICO scores and see what the new score settles at. The new increased score will allow you to shop for better credit cards. NerdWallet has a credit card section that allows you to see which cards you will likely be approved for based on your scores: http://www.nerdwallet.com/credit-cards/. Of course, your income and credit card debt will be a factor as well. Shopping on this site will give you the ability to pick a card based on type needed and your current credit score. You will also be able to look at the ratings and terms of each card so you can make an educated decision on which card suits you best.
Opening credit will decrease your average age of credit which will also reduce your scores. This means you must build your credit strategically. Opening many accounts within a short period will have a major impact on your credit scores so time these openings wisely.