Have you ever worked with a borrower who had no credit scores? Many times, these people have been advised by someone along the way that they should open up some type of loan account or credit card in order to have some type of credit card. While this isn't bad advice, please be aware that an account must be reporting for at least 6 months before any type of score will be generated. Therefore, if it has recently been opened, it will not reflect in the score even if they are making on time payments. So, if you don't have the option of using a no score program, pull their credit again in a few months once the account has been open for at least 6 months.
I'm sure you all know this as well but... make sure that they keep their balance as low as possible on their card every month so that it will boost their score. In the past it was believed by most people that it boosted your score if you only used 50% of your credit line. However, the magic number is actually 33% of the credit line! So...don't go crazy! Buy a tank of gas, pay it off. Buy groceries, pay it right off! Credit cards can definitely boost your scores. Don't let them hurt your scores!!
Stay tuned for more credit tips!
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