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- When Choncé Maddox and her husband were dating, she helped him build his credit by using tips to boost his.
- He opened a credit card, made a plan to pay off his debt, and used a free service to monitor his credit as it grew.
- The excellent credit rating he gained helped him get approved for another card and qualify for a great mortgage rate on his first home.
- See Business Insider’s Picks For The Best Starter Credit Cards »
I have never hesitated to talk about money, especially in relationships. Back when my husband and I were dating and starting to get serious, I started the conversation about money.
“How much money are you making? ” It was easy. We both had part-time jobs in college, but we had a sense of where our careers were going. “So how much debt do you have? In college, we both went out student loans and were pretty open about it.
I was happy to know that my husband had no credit card debt at the time. However, he did not have a lot of credit rating That is. Or even up to a utility bill in his name.
Nonetheless, I was glad my husband didn’t try to hide it from me because I was more than willing to help him build his credit responsibly. Our relationship has always been about helping each other be successful. We don’t believe in specific gender roles or competing with each other to see who might get the best results. Instead, it’s more efficient to collaborate and work as a team, so I chose to help my husband with his credit.
Here are five strategies that helped him achieve an 800 credit score.
1. We understand how credit works
In order to help my husband raise his credit score to 800 which is considered a excellent mark, I first had to help myself and understand how credit works. I had spent two years before (before we met) educating myself on credit and increasing my own score.
Your credit score is basically a three-digit number used to determine how trustworthy you are as a borrower. If someone came to you on the street and asked you to borrow $ 5,000 and you had the money, would you give it to them? Probably not. You don’t know them and therefore you have no confidence in them. That’s what banks and lenders feel when they issue credit cards, personal loans, auto loans, and mortgages. A good credit score helps them feel like they’re taking less risk and also helps you get the funds you need.
To understand how to create credit, it is important to know how credit scores are calculated. Some credit score factors are more important than others and therefore will have the greatest positive or negative impact on your score.
here are the factors that determine your FICO score:
- Payment history – 35% of score
- Use of credit – 30% of score
- Length of credit history – 15% of score
- New credit – 10% of the score
- Mix of credit accounts (how diverse are your accounts i.e. student loans, mortgage, credit cards, car loan) – 10%
2. We tracked his score via Credit Sesame
Credit monitoring also played an important role in helping my husband achieve a credit score of 800. We each signed up for free credit monitoring with Sesame Credit. It was an easy way to visualize the goal of increasing my husband’s score.
Credit Sesame uses a rating scale to measure your credit health and also makes recommendations on specific things you can do to improve yourself.
You can see your TransUnion score for free, but if you want to request a full credit report from all three bureaus, Credit Sesame offers it for an additional fee. (Note that you can request a free copy of your credit report from each of the three bureaus once a week during the coronavirus pandemic.) Yet even without the paid credit report, we were able to use Credit Sesame to determine where my husband could improve his credit, using Credit’s debt analysis and credit analysis tools. Sesame.
We chose to start focusing on three of the most important factors: payment history, credit usage, and length of credit history, which in total would contribute 80% of my husband’s score.
3. He applied for a card to start building up credit
My husband didn’t have a credit card at first. We’ve both had past experiences where people warned us about the horror of credit cards. While I’m sure these family and friends had good intentions, their advice was wrong.
Credit cards are neither good nor bad. It is a neutral tool that you can use to build your credit and gain additional benefits. Not having a credit card was actually a good place to start as I thought my husband would at least qualify for an unsecured base card.
He decided to get the Capital One Quicksilver Cash Rewards Credit Card– a great option for those new to credit or trying to rebuild their score. This card has no annual fee and gives you 1.5% cash back on all your purchases. The card also offers an introductory APR of 0% on purchases for the first 15 months, then a variable from 14.99% to 24.99%.
4. He used the credit card – wisely
Once the credit card was obtained, the next step was to focus on using it wisely. My key strategy in building my own credit was to use a quality credit card because it provides an ongoing credit history.
Extract credit builder loans in the bank was an option, but we didn’t consider it because you eventually have to pay off those loans. Once you do, that credit history can go away, which can cause your score to drop again.
I have found that using a credit card wisely is one of the best ways to build a positive credit history. My husband focused on keeping the card usage low and paying the bill in full each month. His starting limit was $ 1,500, so he always aimed to use less than 30%.
One easy thing we did was set up a small, regular monthly subscription like
or an auto-pay bill so that the card is charged monthly to establish an active credit history. We never used our cards for reckless purchases and chose to save for things like Christmas, vacations, and emergency spending.
5. He had a budget and a plan to pay off his debts
Of course, when using a credit card to build a positive credit history, the temptation to spend too much money can easily arise. When we got married, we combined our finances and created our family budget together.
I created a spreadsheet to track our income, expenses, and debt. Having weekly financial meetings also helped as it allowed us to sit down to discuss our goals and progress. We wanted to make sure we were living within our means and managing our money wisely so that neither of us had to rely on credit cards or debt to get by.
When it comes to developing a debt plan, my husband chose to pay the minimum on low interest debt like his student loans. He paid off his car loan and all other bills, but decided to use student loans to gain more credit history and diversify his credit profile.
Remember that your credit combination is usually 10% of your score. It’s a small amount, but it can still play a part in the grand scheme of things.
His high score now helps us achieve our goals
A credit score of over 800 didn’t happen overnight, but it did keep us on the same page financially.
When we got engaged, we both were able to get the IHG® Rewards Club Premier credit card and use it to pay the wedding expenses. We had already saved up for our wedding, but we used the rewards cards to pay for the expenses and then immediately paid off the balance on the card in full with our money. This allowed us to earn enough reward points to score nearly a week in the Caribbean at an all-inclusive resort for our honeymoon and flights for under $ 400.
When we bought our first home in 2018, I didn’t have to worry about our lender using my husband’s credit rating or mine as a “lower rating” to consider us for the loan. We both had excellent credit and we qualified for a good mortgage rate.
When financial setbacks arise, we are able to remain open and honest with each other about the situation, and then work on a game plan to resolve it.