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The laziest ways to improve your credit

You don't have to bust your hump to get better credit scores. Here are some things you can do without lifting a finger.

By Credit.com Apr 25, 2014 3:56PM
This post comes from Adam Levin at partner site Credit.com.

Credit.com on MSN MoneyThere are people out there who expend a lot of energy in the quest for a totally meaningless perfect credit score. Most people know it’s important to have good credit, but they don’t want to spend too much time worrying about it. The good news is that you can be pretty lazy and still improve your credit.


Woman asleep © Tom Grill/CorbisThe difference between having good credit (generally from 700-749) and bad credit (anything below 620) can mean the difference between getting the car you want versus the car with monthly payments you can afford. A well-managed credit history can make home ownership possible years before a poorly managed one, while really bad credit could cause you to lose a rental apartment to someone more vigilant about their personal finances.


Credit is an investment that accrues value through behavior. If you do the right things, your score will increase. Like an investment portfolio, your credit portfolio can improve your quality of life. But just like any investment, a credit portfolio requires some basic knowledge and maintenance.


Here are four very easy things you can do to start improving your credit.


1. Let your accounts get older

The age of your credit history accounts for roughly 15% of your overall credit score. In the same way car insurance companies use age to predict how risky it is to insure a driver, the three credit bureaus use the age of your credit as a way to determine your likely behaviors.


The older your credit history, the more information the bureaus have about your habits, and account age goes to predictability. Would you rather lend money to someone who has kept an account in good standing for 12 years or one year?


While most blots and blunders on your credit report fall off after seven years -- they have their own credit score silo -- the age of your credit continues to positively affect your score. The best part? You just have to keep doing what you’ve (hopefully) always done and keep using credit responsibly.


2. Stop searching for new credit

Every time you apply for credit, a lender makes a hard inquiry into your credit. The number of inquiries can have a big impact on your credit, accounting for 10 percent of your overall score.  Inquiries remain on your credit reports for two years, but only those within the past year count, at least with the majority of credit scoring models. And certain types of loan shopping – for auto, student loan or mortgage loans -- will result in only one inquiry on your credit report if you shop within a short window (two weeks is safest).


Not shopping for credit until you really need it is a simple strategy that requires you to do nothing, and can be a good thing for your score over time.


3. Ride the coattails of someone with good credit

This trick doubles as a training tool. Parents often add their teenage children as authorized user on a credit card to teach them about using credit responsibly.


There are other situations where becoming an authorized user on an account owned by someone with a strong credit history can be a good idea. Specifically, if a family member, spouse or significant other has bad credit, you can let them “piggyback” on one of your accounts. For the authorized user, this is the ultimate trick because it requires no effort at all. As long as the account remains active, the authorized user doesn’t even need to use the credit card and can benefit from the positive credit history. Many people employing this strategy opt to cut up the authorized user’s card so he or she isn’t tempted to use it.


While this is a lazy trick for one party, the person helping out might want to put in a little extra time making sure nothing crazy happens on their credit accounts. If you are an authorized user, make sure the account you’re added to is in good standing, and stays that way. Any mistakes made by you or the primary user can make this tactic counterproductive to your credit building efforts.


4. Let your bank make payments for you

Paying your car loans, mortgages and credit accounts on time is the single most important factor in determining your creditworthiness. Thirty-five percent of your score is based on this one factor. Since you are going to pay these bills anyway, set them up for autopay through your checking account.


The peace of mind you will get knowing every bill is being paid is so much more valuable than the time you need to invest making sure there’s enough money in your checking account to cover expenses.


Managed correctly, your credit portfolio is a guaranteed way to get the things you want in life. You don’t need to obsess over getting a perfect score, you just need to work on making it better. And building credit doesn’t have to be a complete mystery; you can watch your credit scores improve for free every month on Credit.com.


More from Credit.com:


5Comments
Apr 26, 2014 5:48PM
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The Obama Administration has nothing to do with you paying your bills on time and keeping a good credit score. Blame yourself.
Apr 26, 2014 2:38PM
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3. Coattails is not really sound advice. If you are using this method just to establish a history, great. Keep in mind most issuers no longer report an authorized user because this "trick" has been abused. You are unlikely to end up with the desired outcome.

Trying this method to get approved for a mortgage can be very bad. Several lenders are now ignoring AU accounts, while others are factoring it in the debt-to-income ratio. If your friend, spouse, family member does not keep their balances at 0 or very low it could hurt your chances for approval.

The best option if you are trying to establish or use smart credit building practices is to get a secured credit card. You will have to come out of pocket for the deposit, but the rewards will be much greater and will be on your own merits instead of someone else.

May 3, 2014 9:25PM
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I was doing Great with my credit until 2 Famous Banks took over 2 small accounts at the same time and did the same thing. They added extra charges each month after I had paid minimum plus more until it got to $900 dollars just for one minimum payment and I am on SS low income. I took it to my attorney who had them charged with unauthorized charges and harassment and they were not to contact me in any way. Had them on my record for 7 years and could not get help I needed as I am disabled. Recently I moved out of state and tried a bank my family was with and after 2 months they picked on my largest check to return NSF when there was enough to cover it. They put it back thru and to this date no one knows where or who it went to. I left and went to another bank that was well recommended and that turned out to be the worst one, About the same time about 2 months they picked on largest check which was rent and held it until they could return it as NSF. They were holding other checks also. I found out afterwards that they were posting wrong amounts on the on-line account from the real account numbers. I kept wondering why I could not balance. I also found they were putting debits thru before credits on same day even after I called them and told them there was enough to cover them. They put them thru anyways and charged me there fees which are not cheap. I reported them for all the things were doing and continuing to charge me fees. The slightest little spot they could slip a fee they would do it. They even yelled at me over phone and told me I was spending too much when I was going without including a medical treatment. I was told that is a well known fact that banks are doing and I fully believe it. They closed my account and just returned all automatic payments and when I went in branch office it was already closed. When I went to have my direct deposit changed they told me to leave that one open and I told them what happened and they were angry. I told them that I knew what they were doing and of course they denied it. I am back with my credit union and thankful for it as I can go on-line and see a correct account!!!! They put me in a severe financial crisis and ruined my credit more. In closing I would like to say I am not at fault for these events and now trying to try to build back up with credit score. Be careful of these banks and they should not be allowed to operate this way!!!! I am glad I reported it to 2 places one being F.D.I.C. and they are working on it. I learned at a young age to manage my financial accounts and always have and have never had a check returned or any kind of trouble or like these that I have had and 80 years old!!!!! When I worked I was a supervisor for a collection Dept. for 10 year!!!!
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