I think you’ll agree with me when I say, most people care about their credit score…especially when it’s bad. If your spouse’s credit score is less than perfect it can affect your financial goals as a family. When my husband and I were buying our first house we didn’t want to depend on my credit alone. He’s from Scotland and although he was showing the income he hadn’t established much credit.
In this post, I’ll show you what we did to help him improve his credit score before applying for a home loan. Note: There are many variables that affect a credit score and this might not work for everyone.
As a foreign professional, you have access to several brands such as Audi, BMW, Mazda, Mini and Volkswagen. My husband got his first auto loan from Volkswagen. They have a foreign business professionals program available to professionals who are working in the United States on an employment visa.
Even if you’re not a foreign professional but would like to buy a car with little to no credit it’s important to shop around. Dealerships have access to different lenders. To avoid a hard hit on your credit shop all the programs before they pull your credit.
Secured credit card
A secured card will help a user with no credit history build credit. You give the bank a $300 or $500 deposit and they keep that money as collateral. Your deposit will be your credit limit. If for some reason you fail to pay your credit card on time the bank will apply your deposit towards that debt. While building your credit it’s important to keep a low balance. My husband kept a low credit card utilization of 10% or less. It’s important to pay your credit card off every month and set up an automatic payment so you’re never late.
Unsecured Credit Card
After a year of using a secured card, my husband applied for and got an unsecured American Express card. He used his income level as leverage. He paid the card off every month and kept a low credit card utilization.
Transfer credit card debt 0% APR for 18 months
I transferred the debt we had to an 18 month no interest credit card in my name. I divided the balance over the 18 months and set up an automatic payment so we would never be late. My plan was to pay it off once we closed on the house. We technically applied the monthly interest that we were incurring with the Amex card toward our debt and paid it off faster. As a bonus, the debt didn’t show up when the bank pulled his credit which helped his credit score.
Increase your current credit limit
We asked Amex to increase his current credit card limit. Increasing your credit card limit will lower your credit card utilization and can help boost your credit score. Make sure you ask if the card issuer is going to pull your credit. You don’t want a hard hit on your credit.
My husband lacks credit history so I added him as an authorized user to a credit card with a zero balance that I’ve had for over 15 years. When the card arrived I put it in the drawer and have no intention of ever using it. Before you add anyone to your card as an authorized user remember they are not responsible for the debt incurred, you are. I wouldn’t add anyone to your card that you don’t trust 110%. Not all credit cards report authorized users so make sure you check before adding them.
Payment history makes up 35% of your credit history. I put all of our bills on automatic payment and monitor them regularly. One late payment can significantly damage your score.
Monitor your credit
We also monitor our credit through Credit Karma. It’s free. Once you sign up for an account you’ll be able to check out your free scores and reports. They’ll also give you tips and information to help you understand what’s affecting your scores.
The credit card scoring formula is a mathematical formula a lender uses to access risk. It’s not always fair. You just need to have a plan and learn to play the game.
Do you have any tips or tricks you’ve used to raise your credit score? Share them in the comments below. I’d love to hear from you.
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