From 0 to 770: How to establish an Excellent Credit Score in 18 months
When my husband and I first got married, the disparity in our financial situations was sort of laughable. I owned my own home, had a car that was paid off, had several longstanding credit cards and I had a credit score of about 800. My husband, on the other hand, had none of these things, including no credit score at all: zero, zilch, nada! I guess that’s what you get when you marry a younger guy, right? 🙂 Lucky for him, he married a wifey with some knowledge of finances, and we were able to not only establish his credit, but to get him to an “excellent” credit score of 770+ in less than 18 months! With an excellent credit score, we are qualified for the lowest interest rates available for credit cards, home mortgages, car loans, etc., which can add up to big $$ savings on monthly payments! We also look better to possible landlords and employers and anyone else who may have a need to run a credit check on us, because it shows that we are responsible and upstanding people. Ready to learn more on how you can get yourself an excellent credit score and save yourself a bundle each month? Here’s how we did it, in 3 easy steps!
Sign up for a credit reporting service
There are so many credit reporting services to choose from these days, and a lot of credit card companies even offer these for free now, which is great! I personally like Credit Karma because it’s totally free, gives you credit scores from 2 of the 3 credit bureaus, and it shows your score details so you understand where you can improve on things. The score details feature is nice because it gives you a full breakdown of how you are using your credit, and which areas factor higher into your credit score. For example, it will show your payment history, which has a “High Impact” on your overall credit score; so if you are missing payments, this will affect your score in a major way!
When we first sought to sign my husband up with Credit Karma, he couldn’t even sign up yet because it showed that he had “No Credit Portfolio”. So, we had to get things in motion to get him some credit.
Get added as a Joint Account Holder on an Established Credit Account
I checked my own Credit Karma account to see which of my credit cards had been opened the longest, and then I called two of those major credit cards to get my husband added to my account as a joint account holder. This helped earn him credit in two ways: 1) by being a “joint account holder” versus just an added user on the account, it helped to establish him credit as an actual credit card account owner. 2) By adding him to my oldest accounts, this established him credit with accounts that had been open for a long time, which, you will see on Credit Karma, is a “Medium Impact” factor in having a higher credit score.
Sign up for Your Own Credit Cards
After a couple of months of being on my credit accounts, my husband had established himself enough of a credit portfolio that he could apply for cards of his own. I had him sign up for a couple of accounts that are pretty easy to apply for, a major bank (Citi, Chase) credit card, and an Amazon Visa. I limited him to two more accounts, because with a total of 4 credit cards, he now had 4 hard inquiries on his credit, which are yet another factor in determining your credit score. You want to keep the number of hard inquiries low (4 or below, if possible, with 2 or less being most ideal). Hard inquiries drop off about every 2 years, so keep that in mind when opening accounts.
My husband’s credit card accounts were brand new and since he still had relatively new overall credit, his interest rates were pretty high and his credit limit was only like $500 on each. I told him to use them both on small purchases so that we could be sure to pay the full balance off every month. You want to be sure to use your credit cards regularly to establish a payment history with them each month, and PAY THEM OFF! This part is crucial to getting you a good score: you need to keep your balances low and make sure you’re not getting dinged in the process. Don’t miss your payments, not even once!
My husband used his major credit card for his gas purchases, and his Amazon card for every time we ordered something online, which is usually a couple of times a month. We paid them off every month. We also continued to use my cards as usual and paid those off every month as well.
Sit back, and Watch Your Credit Score Rise
This was the fun part. Once we were able to sign him up for Credit Karma, we logged in monthly to watch his credit score slowly travel upwards. It was such a great feeling to see that our efforts were paying off, and my husband was hugely proud of his high score. Less than a year and a half later, he had earned himself an “Excellent” credit score!
We gradually stopped using his credit cards as often because he’d already established his payment history, and it’s smarter to keep your debt consolidated in one place. So now, we make all of our purchases on the credit card we share that has the lowest interest rate. My husband’s credit limit has grown over the couple of years since we first got him started. We were able to purchase another car and refinance our home under both of our names for a super fantastic interest rate, and now we are saving for our next house.
I hope you found these tips useful for establishing your own credit. This advice is meant for people without credit at all, but if you need help repairing your bad credit, I have a few words of advice for you as well, so be sure to check back in!
*I am not an accountant or financial advisor, nor am I holding myself out to be. Although care has been taken in preparing the information provided to you, my advice to you comes solely as that of a friend.*