I am a mortgage officer at a community bank. Knowing the importance of credit I have been helping my daughter to rebuild her credit over the past 11 months. Payment history makes up 35% of your credit score. If you have late payments -a good payment history takes time to rebuild! When I started working with my daughter her credit score was 533 due to late payments on her student loan and a medical collection of $135. I am pleased to say her current score is 754! You may ask how could her score be increased over 200 points in less than a year?
First thing we did was put her student loans on automatic payments so she was sure not to have another late payment!
Next she obtained a secure credit card with a limit of $1000 to pay for gas and groceries and pay off monthly
I then added her to 3 of my credit cards as an authorized user. I choose the oldest with high credit limits.(I did not give her the cards to use-only added her as an authorized user for my own protection) BEFORE being added as an authorized user be SURE you know the credit history and habits of the owner of the account. If there is a late payment on their account this will be reflected on YOUR credit history!
This increased her credit approximately 100 points
She paid the collection (less than 24 months old)directly to the creditor NOT to the collection agency
Use caution when paying collection accounts if over 24 months old. If you make a payment the account then becomes active and can actually hurt your credit score
She received offers from credit card companies as pre-approved this gave her credit with out a credit inquiry
She and I meet regularly to discuss budget and use of credit cards-she uses them for normal expenses that she previously used her debit card for-gas & groceries. This allows her to save the money and pay the credit card balance monthly.
Always remember how difficult it is to increase your credit score and be sure to maintain it!
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