Improving your Credit Score and Tradelines
Working with a borrower all day today. Truly ugly situation because he doesn't have a long history of credit, and this is the major obstacle to getting the loan done. He actually makes the money, and has a sufficient history of making the money to justify the loan "full documentation". But: He only has one usable line of credit, and it is only 9 months old. Most lenders require a minimum of three tradelines, at least one of which must be open for 24 months.
On the other hand, there exists a method to help this person. What he is going to do is approach close relatives with long term stable, paid up lines of credit, and ask if he can be added to one of their revolving accounts as a co-user. He does not have to get a charge card, or actual access to the account, he just needs to be added to the account as a co-borrower, and he will get the benefit of however long the trade-line has been open. He doesn't even have to know the account number (and the credit report omits several digits, so he doesn't get it there, either).
This has two effects. First, he will get the benefit of the length of the trade lines, and second, he will get the benefit of the tradelines being paid promptly and on time for however long. Preferably, these are low limit and low to zero balance accounts, because he will be dinged for any necessary payments on his debt-to-income ratio. But it will likely raise his credit score significantly (I would guesstimate at least sixty points) by giving him a several year history of on-time payments, as well as giving him an adequate history of tradelines.
Nor is this fraudulent in any way, shape or form. This is being done in full consultation with the lender. The lender has been notified in writing and approved of this. It may seem like I'm always going off about fraud, but in this case something that may appear a little shady actually turns out to be something that both the bank and the regulators can live with. So if you're thinking that loans are always about NO NO NO, here's a very strong YES to go along with it.
Caveat Emptor
UPDATED here
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Improving your credit score can be EASY.
The best way to increase your credit score is to maintian a balance of 30% or less of the credit limit. NEVER pay off your credit cards each month. This will nelp your score. You need to carry a small balance from month to month. IF your balance is higher than the ideal 30% then you should call the credit card compnay up and ask to raise your credit limit.
DM: Actually, you want a very small balance, as required payments hit your debt to income ratio, but 30% is the first actual hit to your credit.
Furthermore, I dealt with those issues in another post, Credit Reports: What They Are and How They Work. This was about one guy who qualified except for short credit history.
Furthermore, this article has been updated here.
This comment edited to remove some self promotion on behalf of the author that I considered excessive. END DM