One very unusual way to make extra income
Lending out your credit
Sounds strange doesn’t it, you look at the title and you read the heading and wonder what does this guy mean. Pretty simple actually, let me explain.
Lets say you are someone that has been working hard on getting that credit score nice and high. 850 is the goal right? Got to get there some how. You try every day to ensure every payment is paid off at the end of the month, your entire credit portfolio is diverse enough that you don’t know what other accounts to open, and you’ve reach the limit of how many inquires you want to have on your credit score. Your all out of ideas and don’t want to keep adding to your credit score.
Enter in “additional card holders”. Most every credit card company allows you to add people under your credit card, for example, a teen that doesn’t have the age and/or experience to start building credit. You simply add them to your credit card, you get an extra lump sum of credit automatically added to your account and they start building credit based off what the credit limit is on your account. Afterwards, you give them a spending limit to make sure they don’t over spend on your account (that you have tirelessly spent time to ensure is in good standing).
So your probably asking, where is this going.
Well, what you can do is also “lend” out your credit to other people, not just your children or dependents.
Lets say you have a good friend, they have terrible credit but have been wanting to build it up and don’t know how. They could go the normal route of getting a credit building card, learning the ins and outs of said card and ensuring payments are done on time. Problem with this is it will take some time to get that score anywhere past 700.
Solution. You with the 700+ credit score and a credit card with a couple grand as a limit, add them as an additional card holder to that credit card, you get an extra bonus credit limit (since your adding more spending) and within no time at all, they will be at credit score greater than 700. To ensure that they are going to stay on track, you get a deposit from them equal to the same amount of a spending limit and if it ever comes down to it, you use that money to pay off their debt.
So what are the pros to you. Well you get an extra chunk of credit limit, you help out a friend in need, you can potentially make some cash if you decide to charge them for using your credit and get all the rewards points from their purchases.
This does come with some risk as you will have to monitor their purchases (spending limit helps here) but the risk is well worth it to increase your overall credit score.
This article may not directly apply to you but if you are wanting to build your credit, there is usually someone one with better credit around you that you could reach out to.
For more financial tips and tricks, see my the rest of my stories and follow me to stay up to date with the latest.
Alejandro Medina | January 2021
