Did You Know Series Presents: Helping Others Establish Credit

Did you know…adding your child or spouse as an authorized user on a credit card can help them establish credit? It should only be used as a stepping stone to help them establish their own credit, and should not be a long term solution.  Once the authorized accounts have helped them establish new credit and credit scores, this person should start establishing credit on their own.  Secured credit cards or secured lines of credit are an excellent way for people to build their own credit.  Most gas cards and department store cards are also a great way to build credit.  Once a person has established or re-established credit, it is very important to maintain it properly. Rule number one is to pay bills on time. One 30 day late payment on any account could drop a FICO score as much as 100 points, with the late payment remaining on a credit report for 7 years! Also, be sure to keep the balances low – preferably below 25% of the high credit.  It is best for that person to establish two or three credit cards in their own name.  By planning ahead, they will be ready for that big purchase with the credit they have established on their own.