How My Wife’s Credit Score Jumped Over 150 Points in Two Months
I married the woman of my dreams on a spring afternoon in May 2017. A few months after we were engaged, we started to really plan our future together post wedding and list out our financial goals. Number one on both our list was to buy a house. That was our shared financial driver. My wife lived at home with her parents until we moved in together after our honeymoon. This allowed her to leave college with minimum student loan debt and enter our marriage with no car payment! Come on Jesus! We bless your Holy name! However the downside to everything was that she only had fair credit. It was floating around 600. The only accounts she had in her name was a student loan account and an American Express card. Since we wanted to build a house, we knew that her credit had to get better. Her credit report didn’t have anything negative on it, it practically wasn’t enough in it to give her a great score. Since we wanted to buy a house in the future we knew we had to build her credit.
Okay so here’s the answer to the million-dollar question: How did my wife’s credit score jump over 150 points in two months? I added her as an authorized user on a couple of my credit cards.
Three ways how her score increased over 150 points by adding her as an authorized user…
1) It increased her credit age: The only open account outside the student loan that my wife had was a personal credit card that was opened for a few months. As a result, her age of credit history was poor. I needed to add her as an authorized user on a card that I’d had for decent amount of time. I added her as an authorized user to my Discount Tire card and my Discover Card. The DT card was the oldest card I had. This increased her credit age from poor to fair. Poor is classified as <2 years, fair is 2-4 years. Institutions report how long the account has been open not how long someone has been an authorized user.
2) It increased her total account: Within a week, I added her as an authorized user to two of my credit cards doubling her open accounts. Although we doubled her total accounts, the impact was minimum compared to the weight that credit bureaus put on total accounts compared to other categories.
3) It decreased her credit usage ratio:The credit usage ratio is determined by taking the total amount of credit debt divided by your total credit limit. For example, if I had a $1,000 credit limit but my statement ended with a balance of $650, my credit usage ratio would be 65%. That is an enormous credit usage ratio. The credit usage ratio is one of the biggest categories that factor one’s credit score. I added her as an authorized user on my Discover Card which had the largest credit limit out of my cards. The personal credit card she had came with a very low credit limit with a credit ratio in the 50-74% range, which is considered fair. The target credit usage ratio should be 0-9%. This is considered exceptional. The card I added her to had around a $15K credit limit so it shot her credit usage down to the exceptional category fast. Now that same card has a $32K limit and it continues to benefit here.
In totality, over the course of two months, her credit went from the low 600s to mid 700s. By adding her as an authorized user on my oldest card and the card that had the largest credit limit, her entire credit profile changed and immediately put us in position to accomplish one of our biggest goals. Adding your significant other as an authorized user comes with trust, transparency, responsibility, and alignment. If you are reading this and feel that you and your family can benefit from these simple steps I believe you should go for it. I view credit cards much like steak knives. They can be extremely beneficial when used correctly. On the other hand, they can be harmful to yourself and others when not used correctly. But for my wife and I, credit cards have been the driving force behind increasing our credit scores. The better the credit score, the better rates you get for loans such as mortgages. Live smart, be creative, go Skyward!