Building Credit Without Spending Money
Building Credit Without Spending Money. You can “piggyback” to good credit if you have no credit of your own. Simply become An Authorized User on a well-established account that reports to the 3 major credit reporting agencies.
The 3 major agencies are Equifax, Experian, and Trans Union. Ideally, you should trust the person and know that they are “good with money”. If they have any derogatory statuses on the account so will you.
As an authorized user you will not need a card or access to the account because your sole purpose is to just gain the benefit of on-time payments, the age of credit, and credit mix, inquiry, and credit utilization. Without having to spend money.
This is by far the cheapest way to get a credit score boost. However, You are not the primary on the account so while you are boosting your credit you are not building any credit of your own. You must be the primary or have a joint account to truly build credit.
Be smart about your decision to becoming an authorized user. Adding yourself to an account that’s in good standing can get you one step closer to better credit scores as well as access to products and rates that you may not have otherwise qualified for.
How to become an “AU” or Authorized user and building credit without spending money
Being an authorized user simply means you can use someone else’s credit card or account in your name. You can make purchases and use the card as if it were your own, but you’re not the primary account holder. That’s it.
To make you an authorized user, the primary account holder needs to add your name to their credit card account, giving you “authorization” to use it. You’ll receive a credit card tied to the account, though you won’t have every privilege of the primary account holder. For example, you may not be able to make changes to the account, request a credit increase or adding more authorized users.
As an authorized user, you are not legally responsible to pay the bill or any debts that build up. This is still the sole responsibility of the primary account holder.
Get a co-signing account. Like a car loan for example. Maybe your spouse or parents are going to get a new car. Being a joint applicant will certainly be beneficial for you. You get the balance, the debt pays down, the inquiry, the credit mix, and the payment history.
The hard part is getting someone to let you have a mutually beneficial account and not technically have to pay for it. In the event that they fall on hard times you are “jointly” responsible so there is a chance that you may have to pay in the future. Legally you are liable also.
If you and the joint account holder have a falling out, you’ll likely have to close the account. This may lower the average age of your accounts and ding both of your credit scores. It may be difficult to sell without the other “joint” account holder. You may need the joint account holders signature and authorization to even be removed.
You may not want to do anything jointly if you have any uncertainties. This is a very risky proposition. if you are not the one paying then It does make sense. The likelihood of becoming a joint account holder with someone is very small if you are not married.
This is not something that people normally do. Companies are no longer supporting this so you’ll have to find a company that does joint applications. Back in 2013, Chase scrapped its joint cardholder offering. Capital One stopped offering the option over 10 years ago, and American Express never offered it to consumers in the first place.
Partners who blend their financial lives often share a credit card account as a way to stay accountable to each other, track expenses, and build individual credit scores.
What are the benefits of having a joint credit card?
There are several benefits to consider. First, there’s the presumed transparency factor. If you have a joint budget in place, sharing a credit card can be a good way to hold one another accountable for what you’re spending and plan to spend.
A joint credit card can also take some but not all of the headaches out of paying bills. You can simply charge shared expenses to the card each month, rather than divvying them up between the two of you.
get a co-borrowing account
Get a mortgage with your spouse or friends if you are sharing finances and living quarters and want to do so for the long term. You’d both benefit from it so long as everything goes well. Keep in mind that this is not a small deal.
Getting a mortgage with someone else name on it has as many pros as it does cons should things go awry.
Now we have covered the three ways to get joint credit. Co-signing, Co-borrowing, and Authorized user accounts.
Joint credit can become an issue and concern in divorce proceedings. In these cases, the terms may give one partner responsible for certain debts and the other partner responsibility for other debts. It is also possible that following divorce proceedings, former partners may still affect one another’s credit.
Means of closing a joint credit card account can be difficult, especially in the case of an outstanding balance. Even if an issuer allows a credit card to be closed, the balance usually must still be paid under the original terms. One potential solution includes transferring a portion or all of the balance to a separate credit card.
None of these things is an easy feat. So be very careful when doing this. Being irresponsible in your decision to get joint credit can lead to having to deal with bad credit for years. Bankruptcy, divorce, and breakups are often a result of doing things jointly.
Are the benefits of piggybacking and joint credit worth the reward
Most will say yes assuming that everything went smoothly. Every person has a different experience. More and more companies are not wanting to issue joint credit.
Building Credit Without Spending Money
Make sure you have an agreement not to pay for any of these accounts in case things go south. The joint account holder should be well aware that you are building credit using these methods. They are essentially helping you do so.
Especially if you do not have the means to pay these accounts on your own. The legalities are many and you can be sued for shared or owed liabilities such as joint accounts. Not having an agreement in place hurts you much more than it helps you.
Keeping a good relationship with the joint account holder helps ensure that your credit building method goes smoothly. Many couples, parents, and friends have built credit this way. It works just the same as other credit-building methods however you simply won’t have to spend any money.
Additionally, if you are building credit get support. There are other ways to build credit without spending money. Instead of gifts of items ask family and friends to gift you credit such as credit builder loans. Some are as small as $500. They are basically savings accounts that report as loans to your credit report. Get two or three of these accounts reporting to all three major credit reporting agencies and your credit will go up.
Another way is to request gift cards & gift certificates for “easy to get” online credit accounts. Open an account and buy something with the gift card or gift certificate. Charge the items to your account. Make on-time payments every month using gifted cards and certificates.
Parents can add their child to the title or deed that they have had for a long time. Sometimes there are age restrictions so be sure to ask. Their child will build credit very quickly using this method especially if they have had a mortgage for several years or more.
These are the ways to build credit without spending money. If I missed anything will you let me know? If there are more ways than the ways I have outlined can you tell me so that I may add them to this post? I’d love to know if there are more ways to build credit without spending money.
There are 3 ways to build credit without spending money. Co-borrowing, co-signing and Authorized user. The bottom line is that linking your credit with another person’s credit always has the potential for risks and rewards.
Decide who pays the bill. Agree that if it is not you who has to pay the bill that you have no control over the account. If that’s not how bill handling works in your home, you need to decide upfront which one of you is going to pay the bill.
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