fixed your credit score

We’ve all made mistakes, and that includes mistakes with credit. But while some elements of fixing your credit score require time and patience, there are other things you can do that can make a difference more quickly.

How to increase your credit score in 30 days

There’s no way to boost your credit score overnight. But there’s one thing you can do now that can have an impact over the next month: pay down your credit cards.

The second-biggest factor in your credit score is how much you owe. It makes up 30% of your FICO credit score. A big part of that number is your credit utilization rate, which is calculated by dividing your credit card balances by your credit limits.

For example, if you have a card with a $5,000 and a $10,000 limit, your credit utilization rate for that card is 50%. Because credit card companies report balance information every month, any changes that occur are reflected immediately the following month.

Experts recommend keeping your credit utilization rate below 30%, but it’s best to go as low as possible — as long as it’s not 0%, which signals that you’re not using credit at all.

It’s impossible to know exactly how many points you can recover by doing this. Your FICO score is made up of your full credit history, and everyone’s credit profile is different. But if you manage to pay down a balance from a 75% credit utilization rate to a 10% rate, that could make a big difference fast.

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Other ways to increase your credit score fairly quickly

Paying down your balances can be the most effective way to increase your score quickly, but there are other ways to do so that you should consider.

Ask to become an authorized user

Credit card companies allow account holders to add authorized users to their account. For example, if you want your wife or kids to have a card tied to your account, you can request that. As a result, the credit card companies report the account history for those authorized user accounts.

This means that you can get the benefit of the full history of someone’s credit card just by getting added to their account. “Ask family and friends until you find someone with the ideal credit card,” says Joshua Crum, owner at Rebuild Repair Credit. “It should have a long, positive history with a low credit utilization rate.”

Crum also points out that you don’t even need to use the card to get the benefits of the account.

Get a secured credit card

The most important factor in your credit score is your payment history. And while you can’t go back in time and get rid of late payments, you can start making on-time payments right now.

One good way to do that is to get a secured credit card. Unlike traditional credit cards, secured cards require you to put down a deposit, usually equal to the credit limit you want. You can then use the card as you would a normal credit card.

Note: A secured card is not like a prepaid debit card. You don’t load money onto it, use it up, and reload it. The deposit stays with the credit card issuer to protect itself in case you default, and you get it back when you close the account.

“Put as much as you can afford down on a secured credit card,” says Crum. “The more, the better, as this will be your credit limit. Use this card responsibly, keeping your balance low and every payment on time and well above the minimum.”

Doing these things may take longer than paying down your balances on other cards, but they go a long way in establishing a good payment history, which is crucial to rebuilding your credit.

Credit repair

In some cases, your bad credit score may not be entirely your fault. Identity theft and creditor or credit bureau errors can hurt your credit if you’re not careful. Get a free copy of your credit report through AnnualCreditReport.com and review it for possible errors or accounts you don’t recognize.

If you find one or more, you can try to work with the creditors and credit bureaus yourself. Or, you can hire a credit repair company to do it for you. It may take a little time for them to sort things out, but once they do, you should see the errors or fraudulent accounts fall off by the next reporting cycle, says Crum.

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Maintain realistic expectations

While there are a few things you can do that will quickly make a difference in your credit score, a full fix and return to excellent credit status does take time.

“For a typical lightly damaged credit file, expect around a year to complete a full rebuild and repair,” says Crum. He notes, however, that some cases can be resolved sooner or take longer than that. “There are too many variables to give an exact estimate.”

The important thing is that you look at all of the negative things that are impacting your credit score and work toward finding solutions.

Be sure to use a credit monitoring service throughout this whole process to keep an eye on your score and see how your actions affect it. The sooner you start working to improve your credit, the sooner you’ll reach your goal.

ideal credit utilization rate

How much you owe makes up 30% of your FICO credit score. A big part of that – though not the whole thing – is how much you owe on your credit cards.

Having a low credit utilization rate is crucial to building and maintaining an excellent credit score.

Read on to learn how to calculate your credit utilization rate and how much it should be.

What is a credit utilization rate?

Your credit utilization rate is specific to your credit card usage and is meant to determine how much of your available credit you’re using.

The number is calculated by dividing your balance by your credit limit. So, if you have a balance of $3,000 on a card with a $10,000 credit limit, your credit utilization ratio is 30%.

The number is calculated based on each card you have and across all your cards collectively. For example, say you have another card with a $2,000 balance and a $3,000 credit limit. As a result, you have three credit utilization rates:

  • $3,000 / $10,000 = 30%
  • $2,000 / $3,000 = 67%
  • $5,000 / $13,000 = 38% (combined)

What is the best credit card utilization rate?

While many experts recommend keeping your credit utilization rate below 30%, “there is no hard and fast rule,” says Liran Amrany, founder and CEO of personal finance app Debitize. “In general, you want to be as low as possible, though not 0%, as then it looks like you are not using any credit at all.”

Amrany is on the right track. Experian has used its consumer data to show that those with the best credit scores use just 8% of their credit card balances. In contrast, those with a nonprime credit or worse use 59% or more of their available credit. That doesn’t mean you should keep a balance on your card. But you do need to use the card from time to time for it to be considered an active account.

How to keep your credit utilization rate just right

Your credit utilization rate is calculated monthly. As a result, “often the fastest way to improve your credit score is to improve your utilization,” says Amrany.

To make sure your credit utilization rate is just right, start by calculating it. The good news is that you don’t need a credit utilization calculator — the math is simple. Take each of your open credit card accounts and calculate your credit utilization rate by dividing the balance by the credit limit.

If you have any high rates, your next course of action depends on whether you carry a balance on your card or you pay it off in full each month:

Carry a balance

If your credit utilization rate is always high because you carry a high balance on your card, find ways to pay it down to keep it low. Consider no longer using the card in the meantime to avoid running the balance up again, especially if you’re close to maxing out your card.

Pay off in full

If you have a high credit utilization rate but always pay off your balance each month, your credit can still take a hit. One way to solve the problem, says Amrany, is to “pay off most — but not all — of your credit card balances right before your statement date.” That’s because most banks report your utilization based on your statement balance.

Some other tips to keeping your credit utilization rate low include:

Set balance alerts

For example, if you have a $10,000 credit limit and you want to keep your credit utilization rate below 15%, set an alert for when your balance reaches $1,000 so you know that you can only spend $500 more before the statement closes.

Ask for a higher credit limit

The higher your credit limit, the more you can spend on the card without running up your credit utilization rate. This is especially helpful if you have a low credit limit on a starter card. Just keep in mind that requesting a credit line increase often results in a hard credit check, which can knock a few points off your credit score.

Make payments throughout the month

Building on Amrany’s proposal, make multiple payments on your credit card throughout the month to keep your utilization rate low. This is especially helpful if you tend to use your card a lot.

Don’t believe this myth

Having a 0% credit utilization rate is not ideal because it signals that you’re not using credit at all. Because of this, some suggest that you shouldn’t pay off your whole statement balance by the due date, essentially leaving a balance each month that generates interest.

This, however, is a common misconception, says Amrany. “It’s completely false. In fact, the bureaus don’t even know if you pay your statement balance in full every month or carry a balance month to month.”

And he’s right. If you take a look at your credit report, all you’ll see is your last reported balance — again, usually your statement balance — and whether you’ve made on-time payments. There’s no mention at all of how much you paid or whether you paid the balance in full or only partially.

The bottom line

Your credit utilization rate is a big part of your credit score. Keeping it as low as possible is one of the keys to achieving excellent credit. By knowing what your rate is and using the above tips to keep it low, you’re on the right path.

If you can’t get a credit line increase or you simply want to add some available credit to lower your utilization rate, check out some of the best personal and business credit cards to see if one fits your needs.

identity theft protection worth the money

As cyber thieves become savvier, identity theft continues to rise. According to the 2017 Identity Fraud Study conducted by Javelin Strategy & Research, 2016 was the worst year ever for identity theft.

amount stolen by cyber thieves from 15.4 million U.S. consumers in 2016

Their study found that cyber thieves stole $16 billion from 15.4 million U.S. consumers.

Cyberattacks on companies that hold sensitive financial information are also becoming more prevalent. In September 2017, cybercriminals stole the personal data of 143 million U.S. consumers from credit reporting agency, Equifax.

“In today’s connected world, identity theft is ubiquitous,” says Steven Bearak, CEO of IdentityForce, a company that provides identity theft detection, support, and recovery services.

Says Bearak, “Fraudulent new account openings and account takeovers are very common. Fraudsters often have your account communication rerouted, keeping you in the dark so that the theft can continue longer.”

Consequences of identity theft

The repercussions of having your identity stolen are far-reaching and potentially devastating. Your credit score is likely to plummet. You’ll most likely need credit repair.

Credit Force estimates that victims of identity theft spend up to 600 hours or more struggling to retain their stolen identities.

To understand the far-reaching effects, here is a sampling of what an identity thief can do in your name:

  • Apply for credit cards
  • File fraudulent tax returns
  • Apply for a job
  • Lease an apartment
  • Open bank accounts
  • Obtain a driver’s license and passport
  • Buy and finance a car
  • Get a mortgage

How do you stop identity theft?

How do you protect your credit and your overall identity? When it comes to identity theft protection tips, Bearak’s top tip is to remain vigilant.

He says, “With all of the scams out there, being aware and careful with your personal information is your best defense.”

According to Bearak, everyday activities may unknowingly put you at risk. “Sharing phone numbers, home addresses, and email addresses can open the door for thieves to get deeper access to personal information.

They can use that information to access your medical records, credit card numbers, tax returns, and retirement and bank accounts. Avoid sharing personal information unnecessarily.”

Another way to remain vigilant is to monitor any changes in your credit and identity profile. You can do this on your own or purchase identity theft protection. Such services offer monitoring of your personal information for signs of identity theft.

These companies also offer recovery services to help you deal with the aftereffects of identity theft. Some companies include access to your credit reports and scores.

Free or paid identity theft protection?

Free identity theft protection options exist, including the federal government’s IdentityTheft.gov website. You can report an identity breach on the website. They then offer you a personal recovery plan and guidance.

The identity theft protection companies that charge a fee generally offer more services. They monitor your credit and personal information. Some just monitor for credit card fraud, while others include social security number theft.

There are even companies that monitor the dark web where information, such as social security numbers, is bought and sold.

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You’re alerted when there’s suspicious activity surrounding your credit or identity. If you discover fraud early enough, you can avoid extensive financial damage.

Identity theft protection companies also assist with identity recovery, including paperwork and phone calls. Some offer identity theft insurance.

How do I get identity theft protection?

Securing identity theft protection is fairly straightforward. Once you determine the company you would like to use, log on to their website and sign up. They will ask you a variety of questions regarding your financial situation and personal identity.

Is identity theft protection a waste of money? Pros and cons

To decide if identity theft protection is right for you, it helps to compare the advantages and disadvantages. Here are the pros and cons.

WEIGH THE PROS AND CONS

Compare the pros and cons to make a better decision.

Pros
  • Constant monitoring of your information/data
  • Various options regarding services (For instance, some companies offer to monitor for entire families, including children)
  • Potential financial reimbursement for whatever is lost if your identity is stolen under their watch
  • Many companies offer a money-back guarantee–if you’re not satisfied with their services
  • Assistance navigating the required paperwork and phone calls if your identity is stolen.
Cons
  • There is a recurring cost. You’ll usually pay from $18 to $25 a month.
  • Identity theft insurance may lack transparency. Read the fine print carefully. There are exclusions.
  • Identity theft protection can’t shield you from everything. Says Bearak, “No matter what anyone says, you can’t stop all types of identity theft. However, receiving alerts when something suspicious occurs goes a long way toward protecting your identity.”

The bottom line

There are no guarantees, but given what your identity is worth and the consequences of having your identity breached, it can be a good idea to get identity theft protection. Professional identity theft protection can help you protect the good credit you’ve worked hard to build.

Says Bearak, “The identity theft landscape is continuously evolving, with new scams being designed every day to steal personal information.  We will continue to see data breaches rise and become even harder to stop. This again means that we all need to be even more vigilant with our personal information.”

If you’ve experienced identity theft and are in need of credit repair options, consult SuperMoney’s Credit Repair Reviews page.

what is a credit builder loan 1

What Is a Credit-Builder Loan?

Are you looking to build or repair your credit? A credit-builder loan may be worth considering since it’s designed to build your credit profile or increase your credit score.

They’re ideal for credit newbies and those looking for a fresh start. Credit-builder loans also work for cash-strapped consumers since they don’t require a security deposit.

How Credit-Builder Loans Work

Credit-builder loans function like installment loans, but they’re designed to help you establish or improve your score. For this reason, the loan amounts tend to be much lower than what you’d with other loan products to help ensure the borrower can afford to make the monthly payments.

Pros

Cons

  • Easier to qualify for than an unsecured personal loan
  • Funds are placed in an interest-bearing savings account, so you’ll earn money as you pay down the loan balance
  • Smaller loans may be more affordable than a secured credit card
  • Payment activity reported to the credit bureaus
  • Funds can’t be accessed until loan is paid off
  • You’ll pay interest on funds that aren’t yet yours. But in some instances, the interest is refunded at the end of the loan term. (Source)

Types of Credit-Builder Loans

Traditional Credit-Builder Loan

When you take out a standard credit-builder loan, you don’t get the money upfront. Instead, the lender opens a savings account and deposits the loan proceeds. This serves as collateral in the event you default on the loan.

Once you’ve paid the balance in full, you can withdraw the money plus interest. Even better, payments are reported throughout the life of the loan, so your payment history will receive a boost.

To illustrate, if you take out a credit-builder loan from Self Lender, you will make monthly payments of $48.50 for 12 months. And at the end of the loan term, you’ll receive $550 plus interest.

Secured Credit-Builder Loan

If you already have money in the bank, you may be able to take out a loan against your own money. You can expect a lower interest rate since the funds that are held as security are your own and are frozen until the loan is paid in full.

Unsecured Credit-Builder Loan

Unlike traditional credit-builder loans, unsecured credit builder loans allow you to get the cash upfront. However, they may come with steeper interest rates to help the lender hedge against the risk of default.

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Secured Credit Card$35 annual fee (plus security deposit)Apply
Secured Credit Card$29 annual feeApply

Who Offers Credit-Builder Loans?

You can check with traditional brick-and-mortar banks. But you may have more luck with local credit unions, community banks, and online lenders. The St. Mary’s Bank, Achieve Financial Credit Union, and GTE Financial are just a few of the financial institutions that offer credit-builder loans.

Use SuperMoney’s personal loans reviews and comparison tool to find more options.You can also view a nationwide directory of credit-building programs at Consumer-Action.org.

What Happens If I Default On the Loan?

If you don’t pay on time, late payments get reported to the credit bureaus. The good news is you have 30 days before this happens, but you should call the lender right away if you know you’re going to be late. You could also lose your chances of getting the cash in the account at the end of the loan term.

Alternatives to Credit-Builder Loans

There are some other effective ways to establish or rebuild your credit.

Secured Credit Card

If you have the cash on hand but prefer not to apply for a credit-builder loan, consider a secured credit card. Once you make the security deposit, the minimum payment is based on how much you spend. Payment activity is reported to the credit bureaus to help you start rebuilding your score. And once you’ve demonstrated that you can manage the card, you may be able to graduate to an unsecured card.

Become an Authorized User

You can also become an authorized user on someone else’s credit card to build credit. Keep in mind your credit score can also be affected negatively if the primary user doesn’t pay on time or racks up a high credit card utilization ratio. But, responsible card use and timely payments can provide a boost to your credit score.

How to choose a credit-builder loan

When considering your options, read the fine print. Be mindful of the loan term and interest rate. Also, pay attention to the monthly payment. If it’s too high, you run the risk of defaulting on the loan and doing further damage to your credit score. Most importantly, confirm that the lender reports payment activity to the credit bureaus.

If you need a loan, make sure you shop around for the best rates. SuperMoney’s loan comparison tool lets you get competing personal loans from multiple vetted lenders without huring your credit score.

self lender credit-building loans review

Self Lender provides credit-builder loans to people who want to improve their credit score. It was founded in 2014 by James Garvey and Conor Swanson and is based in Austin, Texas. This article provides an in-depth review of the benefits and disadvantages of getting a loan with Self Lender.

Self Lender offers a fix to a severe problem in our credit system. If lenders don’t give your loan applications a second look because of your limited credit history, you know what I mean. For people who have never had a loan or credit card or who have been through financial difficulties, it can be a challenge to build or rehabilitate their credit history. This wouldn’t be such a big deal if it weren’t for the fact your credit score affects nearly every aspect of your life. Your credit score has an impact on your insurance policy premium, job application, property lease, and even your love life.

It’s way too easy to fall in a classic catch-22 situation. Lenders won’t approve your loan you because you don’t have a credit history, and you can’t build a credit history because lenders won’t approve a loan.

What is Self Lender

Self Lender provides an alternative by offering people with limited credit history a way to boost their credit scores. Credit score algorithms reward consumers who have a record of paying their bills regularly and on time. Self Lender allows you to give yourself a loan and save money at the same time.

Self Lender Credit Builder screenshot1Until recently, consumers had to rely on opening a bank account with a credit union or bank and requesting a secured credit card to build their credit history. This option works fine, but it requires consumers to place a chunk of cash upfront. Additionally, not everyone qualifies to open a bank account or receive a secured card. Self Lender only requires a small investment to start improving your credit score, and everyone is approved.

How does Self Lender work?

Self Lender is a savings plan disguised as a loan. You choose how much money you want to “pay” every month and the term of the loan. Self Lender limits the maximum monthly contribution based on your income. Self Lender deposits your money in an FDIC-insured bank. The government provides insurance for every account in an FDIC bank up to a maximum of $200k.Self Lender Credit Builder screenshot

Every month you contribute to your savings/loan account, Self Lender reports it to the three national credit bureaus: Experian, TransUnion, and Equifax. After the term has ended, you get access to your money plus interest.

What’s the catch? The only downside to using Self Lender is you have to pay a fee to open an account and a small maintenance fee. This fee is small compared to what many consumers pay credit counseling agencies every month.

What additional benefits does Self Lender offer?

As well as access to credit-building loans, Self Lender also provides free access to your TransUnion TransRisk score (not your FICO score). It also includes a free analysis of the credit factors you can improve and compares your credit score with the national average of your state average credit score.

An important advantage of using Self Lender is that it will never require a hard pull on your credit. Most secured cards and savings accounts require you to agree to a hard credit pull, which will ding your credit by 5 points. (Source)

How much does it cost to get a Self Lender loan?

As of September 2016, opening an account with Self Lender costs $12. The total of the loan varies depending on the loan amount. Here are a couple of scenarios.

If you make monthly contributions of:

$48.5 for 12 months you will pay a total of $44 in fees.

$97 for 12 months, you will pay a total of $76 in fees.

$194 for 12 months, you will pay a total of $140 in fees.

What are the pros and cons of getting a Self Lender credit-building loan?

Self Lender offers a valuable credit-building service we are excited to share with our readers. There isn’t much to complain about and plenty to love.

Disadvantages of Self Lender’s Loans

  • You have to pay a fee, albeit a pretty small one.
  • You need to have a bank account and provide your Social Security Number.
  • No access to your cash until the term ends.

Advantages of Self Lender’s Loans

  • Everybody qualifies for a credit-building loan.
  • Fees are inexpensive.
  • Great way to save money and improve your credit score.
  • Free access to your TransUnion credit score and a personalized credit report analysis.
  • Reports “payments” to all three credit bureaus every month.
  • You choose the monthly payments.
  • It adds an installment tradeline to your credit report. Having a different type of credit account is ideal for consumers who only have credit card accounts on their credit report.
Visit Self Lender
personal loan can help rebuild credit score after bankruptcy

Filing for bankruptcy clears many of your personal financial obligations, but it also places you in credit purgatory. Whether you declare Chapter 7 or Chapter 13, bankruptcy leaves a stain on your credit profile that will stay with you for up to 10 years. But you don’t have to wait 10 years to rebuild your credit. A personal loan, especially from your local credit union or an online lender, can be a powerful tool to help you regain your financial footing and rebuild your credit. 

Tip: Using personal loans to rebuild your credit history is a two-edged sword. Although making regular payments on a personal loan can help, taking on debt can be expensive and push you into deeper financial difficulties. Take a reality check before purchasing a personal loan and make sure you can afford the monthly payments. 

Build Favorable Credit History with On-Time Payments

According to MyFICO.com — the company behind the most commonly used credit score by lenders — your payment history is the single largest factor in calculating your FICO score. A whopping 35 percent of your score is determined by how promptly you pay your bills. By taking a personal loan with lenders that report to major credit reporting bureaus, such as NetCredit or Rise, you can nudge your credit score in the right direction. Why? Personal loans are repaid over months or years, which gives you plenty of time to establish a pattern of on-time payments. 

Tip: If you do decide to get a loan to help your credit score, avoid payday loans. They don’t report to credit bureaus and will do nothing to rebuild your credit. 

Give Yourself A Loan

The drawback of using a personal loan to improve your credit is you may be tempted to buy things you cannot afford. You can minimize the cost of a personal loan by investing the funds in a secure investment instrument, such as a CD, and use the loan as a tool to save money.

Captian Money Tip: Notice the interest you pay on the loan will exceed the income you generate from the CD. This is not a good investment idea. The primary goal (and only potential benefit) is to build a positive payment history.

Many banks and credit unions will provide loans secured by CDs. The money you borrow is deposited directly into the CD account while you make payments on the loan each month. You are essentially borrowing from yourself. This option is great for lenders because there is no risk for them. After you have repaid the amount of the loan, plus whatever interest is charged, the bank releases its hold on your CD. Once your CD matures, you receive earned interest along with your original deposit. In the meantime, your bank or credit union reports your on-time payments to the three major credit reporting agencies, which could help your credit score.

If your bank or credit union doesn’t offer CDs, or if you cannot qualify for a bank or credit union loan, do not despair. You can obtain a personal loan and use the money to purchase a CD from any financial institution that you choose. If you get your loan through an alternative lender, make sure they report to at least one credit bureau.

Obtain A (Secured) Credit Card

Many people choose to live without a credit card after bankruptcy. But everyday activities, such as renting a car or booking a hotel, can be difficult without a credit card. If you qualify for an unsecured credit card after filing for bankruptcy, the terms you receive will be less than desirable: low credit limits, stiff fees, and high interest rates.

Secured credit cards, such as First Progress Platinum Elite MastercardUSAA's Platinum Mastercard (only for members of the armed forces and their families), look and work like regular credit cards but are available to people with poor credit. Also, they usually offer lower interest rates and few or no fees because the credit limits are dictated by the guarantee deposit you provide. 

However, if you just filed for bankruptcy, you probably don’t have much cash lying around to deposit as a guarantee. A personal loan allows you to obtain the cash you need to make a substantial deposit and receive a reasonable credit limit of $1,000 or $1,500.

Captian Money Tip: Credit score algorithms also look at your debt-to-available-credit ratio. In fact, credit utilization accounts for 30 percent of your FICO score. Once you have a credit card, you could further improve your credit score by maintaining low balances on your secured credit cards.

Qualify for Better Credit Offers

None of these methods are quick fixes for your credit. Don’t trust people or companies who claim they can remove all negative items on your credit report. Although incorrect items can be deleted from your credit profile, there’s no way you’re removing legitimate items, such as a bankruptcy. The best approach is to ensure that there are no errors in your credit report and rebuild your credit profile with regular and on time payments, such as loan or credit card payments. Expect to see improvements in your score after about six months to a year.A personal loan can help improve your credit score after a bankruptcy

If you do decide to get a personal loan, stick with lenders that offer competitive rates, consider borrowers with poor credit and report payments to credit bureaus. Of course, obtaining a loan is not the only, or the best, way to rebuild your credit score. Consider talking to a credit specialist about your options. Compare the best credit repair companies and read customer reviews at SuperMoney.com.

Tip: Reputable credit repair companies can help consumers save time and money by providing an in-depth analysis of their credit report and helping with the submission of dispute letters to challenge inaccurate credit reports. Having said that, there is nothing a credit repair company can do that you can’t do for yourself if you have the time and know-how. As with all lines of business, there are bad credit repair companies that are big on promises but provide little to no value for money. Check expert and consumer reviews on credit repair companies before hiring their services.

can paying off your car improve your credit score

If you’re trying to buy a house or car or seeking a new job, making the effort to boost your credit score could mean the difference between success and disappointment, especially if your credit profile is marginal. Even if you’re not in the market for new credit, working to improve your credit score is a good strategy in general. Whether your credit is poor, so-so or even pretty good, chances are it could be even better.

On the other hand, if you’re seeking a silver bullet or magic wand, you are bound to be disappointed. While some of the strategies below can result in a dramatic rise in your credit score within a short period of time, there is no quick fix where improving your credit score is concerned. Nonetheless, following these tips will greatly improve your odds of achieving a higher credit score.

1. Pay Bills on Time

Your payment history counts for a whopping 35 percent of your overall credit score. Maintaining a current payment record is an excellent way to boost your credit score substantially. On the other hand, falling behind on your payments for even one account is an almost guaranteed way to sink your FICO score considerably.

2. Reduce Debt Levels (or Increase Income)

Another significant factor in your FICO score is your debt-to-income ratio. Therefore, reducing your debt levels can improve your credit score quite a lot. If your expenses are already cut to the bone, you might look into boosting your income. Not only will your credit score likely improve, you may feel less overall stress about your finances.

3. Concentrate Credit Inquiries

When you are house hunting, you will probably seek out the best possible interest rate for your mortgage. Likewise, you will probably shop around for the lowest interest rates for a car loan if you’re in the market for a new ride. Credit reporting agencies account for that by counting similar credit inquiries made within a limited period of time as one “hard” credit inquiry, which translates to a lesser hit on your credit score.

4. Leave Old Accounts Open

The age of your oldest active accounts also has a bearing on your credit score. Therefore it’s a good idea to leave old accounts open if they are in good standing. This is especially true for credit cards with high credit limits that you don’t use often – leaving those accounts open also improves your credit utilization ratio, which also boosts your score.

5. Re-schedule Payment Due Dates

Many accounts give you the option of scheduling your due dates. Take advantage of this convenience and schedule your due dates for one or two days after your pay dates if you are a wage earner so that you are more likely to have cash on hand to pay. That’s another way to help maintain consistent on-time bill payments.

6. Correct Credit Report Errors

You are entitled to obtain one free copy of your credit report annually from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. If you space your credit reports every four months, you could monitor your credit year round for free. Monitoring your credit reports and correcting errors is a nearly effortless way to improve your FICO score.

7. Establish and Maintain a Mix of Credit

Maintaining a perfect on-time payment record for one credit card account is great. But maintaining a record of on-time payments on a credit card, and your mortgage and maybe a car note is even better. That’s because credit cards count as revolving credit while mortgages and car notes are categorized as installment debt. Responsibly handling both types of debt definitely improves your credit report and FICO score.

8. Clean Up Overdue Debts

OK, so you messed up one or two accounts in the past. It happens. But if at all possible, you should clean up those accounts that are reported as delinquent or as write offs rather than leaving them in their present status. Paying off those bad debts should result in your credit report reflecting them as paid in full (and if not, write to the credit reporting agencies to correct the errors). That looks much better on your credit report and will in turn improve your credit score.

9. Don’t Telegraph Future Credit Problems

Are you going through a nasty dispute with a partner or (soon to be ex) spouse? Avoid paying attorney’s fees with a credit card, taking a rash of cash advances or using your credit card at a pawn shop. While these actions themselves don’t have a direct adverse impact on your credit report or your FICO score, such behaviors could indicate that you’re having money problems. Merchants and credit card companies might get spooked and reduce your credit limits or even close your accounts – which definitely would adversely affect your FICO score.

10. Consolidate Small Balances

Let’s say you owe 200 dollars on one card and 450 dollars on another and 135 dollars on a third credit card. If possible, pay off those small debts either with a personal loan or by consolidating them onto a single (hopefully low-interest) credit card. Your credit report will reflect one monthly payment instead of several, which can improve your credit score. Just don’t take the opportunity to run up new debts on your paid off cards, or you will defeat the purpose of consolidating your old debts.

Improving Your Credit Score

If you know you’ll be seeking new credit in the foreseeable future, begin taking action as soon as possible to clean up your credit. Allowing at least a year is ideal, but even beginning several months in advance is good. You should also sign up for services like Credit Karma and Mint, which provide free credit scores along with copies of your credit report. That way, you can monitor the progress of your credit boosting efforts.

Although improving your credit score requires both effort and patience, the above examples illustrate that many of the strategies available to improve your credit score involve common sense actions that you should be taking anyway. That’s the good news: nearly everyone can improve his or her credit score significantly.

The end of the year is such a hectic time, with holiday shopping, family get-togethers, parties and other festive occasions. Thinking about money hardly seems in tune with the season. But the end of the year is precisely the right time to map out financial strategies for the coming year.  Following these 10 tips can help make 2016 your most prosperous year ever. Now that’s really something to celebrate!

1. Review Your Credit Report

credit-report1According to a 2013 Federal Trade Commission Report, one in five Americans had errors on at least one of three credit reports, and five percent of Americans had credit report errors that were serious enough to have adverse effects on their ability to obtain credit. All consumers are entitled to obtain credit reports once per year from each of the three major credit reporting bureaus: TransUnion, Equifax and Experian – and the end of the year is an ideal time to correct any errors that might be contained on your report.  You should also work to resolve negative credit report items that are accurate.

2. Update Your Budget

budget

Life changes, and your budget should reflect those changes.  Major life events such as marriage, beginning or adding to your family and purchasing a home have a significant impact on your finances.  The end of the year presents a great opportunity to update your budget to reflect those changes. Smaller changes count too – consider changing your cell phone plan or re-evaluating your car and home (or renter’s) insurance coverage to better suit your circumstances – and possibly to save money.

3. Plan for Major Expenditures

planIt may be too late to minimize the financial pain of this year’s holiday spending – but the end of the year is an ideal time to plan for next year’s holiday season.  Consider starting a dedicated savings account so that you can purchase gifts with cash, not plastic.  Are you planning a big vacation next summer? Don’t wait until May to start thinking about how you’ll pay for it.  Beginning your planning at the end of the year helps to ensure that you’ll have plenty of money to make that next vacation one to remember.

4. Develop Income Growth Strategies

growthMany people suffered major financial setbacks as a result of the recent recession.  Even if you escaped the recession relatively unscathed, you may be focused more on maintaining the status quo.  However, a smarter strategy is to work toward growing your income, whether it’s asking your boss for a raise if you work at a job or working aggressively toward growing your client base if you’re an entrepreneur.

5. Resolve to Begin Saving (More)

saveYou’ve heard and read this advice from financial experts for years: pay yourself first.  But with bills and other obligations, it can be difficult advice to follow.  The end of the year is a good time to prioritize your spending and make cuts where you can.  If you always have more month than money, you’ll need to make significant cuts to balance your budget.  If you’re keeping even with your expenses, stick with modest cuts that don’t feel like deprivation. But establishing a saving habit, or stepping up your saving can make a significant beneficial impact on your budget – sooner than you think!

6. Deplete Your FSA

fsaMany companies allow employees to establish Flexible Spending Accounts as part of their health care benefits.  Some companies even match or partially match their workers’ contributions.  But that money comes with a significant caveat – it must be spent by the end of the calendar year.  Any money left in an FSA, with the exception of 500 dollars that can be carried over to March of the following year, is forfeited.  There’s little wisdom in leaving money on the table. So make those doctor’s appointments you’ve been putting off, buy a new pair of contacts – or two, but spend that dough.

7. Make a Dent in Your Debts

debtIf you’re just making the minimum payments on your credit cards, your account may be in current standing, but you’re hardly doing your finances any good.  Credit card companies love consumers like you – you pay regularly – and pay, and pay, and pay.  Especially if you’re using credit to pay for restaurant meals or for other non-durable purchases, you’ll be making payments long after that meal is forgotten.  A fairly painless way to make a dent in your debts is by employing the snowball strategy.  Increase the amount you pay on your largest bill (or your bill with the largest APR) as much as possible until it’s paid off. Then take the amount you were paying towards that bill and add it to the payment amounts for the next highest.  Rinse and repeat with your next largest bill, and your next, until you suddenly realize that you owe way less money than you did before.

8. Convert Clutter to Cash – or Deductions

clutter to cashIf you have unused possessions that are collecting dust, why not  either sell them or donate them?  That designer jacket that matches nothing in your closet can fetch a tidy sum at a consignment shop. Online platforms like eBay and Craigslist also allow you to get rid of unwanted clutter.  Or if you’re feeling charitable, make a donation to a worthy cause.  Just be sure to get a receipt, so that you can take credit for your generosity at tax time. Your closets — and your pocketbook will thank you!

9. Update Your Investment and Retirement Portfolios

Diversified-InvestmentsDo you have a 401(k)? How about stocks? The end of the year is an ideal time to reassess your investments.  If you’re in your 20’s, 30’s or 40’s, consider taking a more aggressive investment approach.  If you’re closer to retirement, you might want to shift your nest egg into more secure financial instruments.

10. Consider Estate Planning

estate planningNo one likes to think about estate planning and dealing with final expenses, but doing so ensures that your family won’t have that burden to deal with.  If you haven’t written a will or established a trust, the end of the year is an ideal time to take care of that task.  If your estate planning is already in place, it can’t hurt to check it out to make sure that your wishes are still expressed by the plans you’ve established.

All the Best for the New Year!

Happy-New-Year-Many of the suggestions listed above can be carried out in a short period of time, in some cases, less than an hour.  For those tasks that are more involved, approach them in manageable time slots to avoid becoming overwhelmed.  And if you have questions that you can’t figure out on your own, it’s a worthwhile investment to seek the services of a financial or tax professional.  Here’s to a prosperous new year!

Credit_Card_Signup_Bonus_offers

If your credit score is poor – generally below 600, you’ll have trouble obtaining almost any type of credit. You’ll likely find it difficult to rent an apartment; bad credit can even disqualify you for many jobs. Fortunately, time is on your side. Derogatory items fade in importance as they fade further into the past. However, you must also be proactive in replacing negative items with positive ones. Following these 10 tips will help you raise your credit score to 700 – and beyond.

1. Maintain On-Time Payments

Maintaining a pattern of current, consistent pattern of payments on your bills is by far the most important single aspect of establishing and maintaining good credit. In fact, payment history counts for a whopping 35 percent of your total FICO score. Nothing can raise – or lower – a FICO score more than the way you pay your bills.

2. Correct Errors on Your Credit Report

If you haven’t developed the habit of checking your credit report regularly, it’s time to start. The odds are high that there is at least one error on your credit report. Even apparently small errors like a misspelled name can result in your shaky credit being comingled with someone else’s even worse credit. Each consumer is entitled to one free credit report annually from each of the three major credit bureaus: TransUnion, Equifax and Experian. Obtain your credit reports at the annualcreditreport.com website.

3. Pay Off or Settle Outstanding Bills

It’s true that if you wait long enough, many creditors will give up trying to collect what you owe. But the derogatory mark on your credit report will remain for up to seven years. If possible, contact your creditors to pay off or settle outstanding bills. If the bills have been referred to a collection agency, ask for the necessary contact information. Once you’ve paid off the bills in arrears, make sure your credit report reflects that fact.

Personal Loans for Poor and Fair Credit

Lending PartnerMinimum FICO ScoreAPR Range 
No Min36% - 299%*Apply
No minimum36% - 199%*Apply
60015.49% - 34.99%*Apply
6005.99% - 35.89%*Apply
No Min35% - 155%*Apply
5809.95% - 35.99%*Apply

4. Increase Monthly Credit Card Payments

If you’re only making minimum payments on your credit card bills, you may have current status, but you’re not doing yourself any favors. Ideally, you should pay off balances in full every month. But if that’s not possible, try to generate extra income or savings elsewhere so that you can start boosting your monthly payments. After a few months, you’ll begin to see a real difference in your balances – and your FICO score.

5. Maintain Low Debt-to-Available Credit Ratios

The aspect of your FICO score with the second-highest impact is your debt load, which counts for 30 percent of your FICO score. Carrying a high debt-to-available credit ratio can sink your credit. By resisting the urge to max out your credit cards, you’ll reduce your stress levels, and raise your credit scores.

6. Diversify Your Credit Accounts

Having different types of credit can boost your FICO score. If you have credit card debt, try to obtain an installment loan. If you can’t qualify for an unsecured loan, ask for a loan secured by a bank account or certificate of deposit. If you’re a member of a credit union, you may have better luck than applying at a bank.

7. Get a Secured Credit Card

You may have given up on credit altogether as a means of avoiding future financial difficulty. While that’s admirable, it’s no way to build good credit. Instead, scout out secured credit cards from reputable credit card companies. Secured credit cards are indistinguishable from regular credit cards, and responsible use will boost your credit score. One caveat – most prepaid credit cards DO NOT report to any credit reporting agencies, which means that they’re of no use in helping you boost your FICO score.

8. Piggyback Your Way to Good Credit

If you have family members with good credit, perhaps you can become an authorized user on one or more of their credit cards. Your credit will get an immediate boost but you won’t be responsible for any of their debts. Be careful with this tactic – if you slack off on paying your bills, you could trash your family member’s credit, not to mention your relationship. Likewise, if their credit takes a hit, yours will too.

9. Consolidate Your Bills

Consolidating your credit card bills into a single monthly payment accomplishes two purposes: eliminating high-interest credit card debt (and likely obtaining a lower total monthly payment) and giving you one place to pay and a single due date. But don’t make the mistake of running up new debts to replace the debts you wiped out. You should also avoid payday loans at all costs. If you cannot qualify for any other type of loan, you’re better off continuing to pay down your credit card debt.

10. Establish a Bank Line of Credit

If you’re a good, long-standing customer, you may be able to obtain a line of credit from your bank even if your credit is marginal. Having an available line of credit can boost your credit to debt ratio, which improves your FICO score. And unlike a loan, a line of credit usually does not generate payments due until you actually use it.

No Magic Wand

Barring the correction of multiple, serious errors on your credit report, it’s unlikely that you’ll be able to raise your FICO score from 550 to 700 instantly. It took time to sink your credit; you’ll need to exercise a bit of patience, along with your credit repair strategies, to yield results. However, following one or several of the strategies listed above WILL improve your credit report and raise your FICO score.

credit affect my life

How Does My Credit Score Affect My Life?

You may have heard or read the advice that you should work to maintain your credit if you have good credit, and to improve your credit If you have bad credit. But you may wonder just how much your credit actually affects your life. If you are attempting to make changes in your life, your credit score could have a significant effect on your day-to-day activities. But if you never use or need credit, your credit score may have little or no impact.

Rent and Mortgages

Your credit score may have a profound effect on whether or not you are able to rent an apartment or buy a house. Landlords routinely run credit checks on prospective tenants. Banks and mortgage lenders also perform extensive credit checks before approving prospective home buyers for mortgages. If you have bad credit, your prospects for purchasing or renting an apartment or house are grim. You’ll have to work hard to find a landlord or lender willing to overlook your poor credit score.

Employment

get a jobOne of the ironies of life is that if you have bad credit, you may have a hard time finding a job. In some industries, running credit checks seems prudent – such as banking or even retail. Someone with credit problems might be more prone to financial misconduct. But employers also run credit checks in totally unrelated industries, using the premise that good credit is a sign of good character.  Of course, if you’ve been unemployed for months or years, your credit may be damaged due to lack of income, which is one reason why California, Connecticut, Hawaii, Illinois, Maryland, Nevada, Oregon, Vermont and Washington forbid employers from running credit checks as a condition of employment. In Nevada, employers who illegally run credit checks on prospective employees may be forced to hire them anyway.

Utilities

Your electricity. Your heat. Your cell phone – all utilities that often conduct credit checks for new customers. You may be charged higher electricity and heating rates if your credit is poor. If you attempt to obtain a cell phone with bad credit, you may be forced to put down a large deposit or settle for a prepaid phone.

Insurance

You may be surprised to learn that home, rental and car insurance companies also check your credit. If your credit is good, you are offered lower rates. If your credit is bad, you may be denied coverage or obliged to pay much higher rates, even if you have never filed a claim for insurance policies you have held in the past.

Private Student Loans

Federal student loans do not require or use credit checks. But private student lenders almost always run credit checks on prospective borrowers. If your credit is damaged or poor, you will need a credit-worthy co-signer to be approved for private student loans.

Credit Cards

It goes without saying that credit card companies run credit checks. But so-called subprime credit card companies focus on customers with damaged or poor credit. Some credit card companies work with their customers to help them rebuild their credit; others simply soak their customers with high interest rates and stiff fees.

A secured credit card can help rebuild damaged credit. Secured credit cards work just like regular credit cards, and can help rebuild your credit by reporting a good payment record to the three major credit reporting bureaus: Experian, Equifax and TransUnion. Beware of prepaid credit cards which almost never improve your credit score.

Bank Accounts

moneySome banks run regular credit checks on new prospective account holders. Other banks check out potential customers through ChexSystems, a proprietary credit reporting agency that focuses specifically on the banking industry. If you have a history of overdrafts and bounced checks, you will likely have trouble opening a bank account.

Auto Loans

auto loanAmericans love their cars, and why not? Cars represent the freedom to go where you want, when you want. And in your own car, you can play the music you like as loud as you want. But if you have bad credit, you may find yourself depending on public transportation or walking to get around. Auto lenders almost always demand credit checks.  So called “buy here, finance here” dealers advertise that “everyone drives, “ but the main driving forces at such establishments are high interest rates and overpriced cars, many of which are sold, repossessed and resold several times to desperate buyers who cannot obtain approvals for auto loans elsewhere.

If You Never Use or Need Credit

The above list may give you the impression that your credit score affects nearly every aspect of your life. For many people, this is the case. But if you never move, never need to look for a job and choose to make purchases only with cash, you can get by without dealing with credit.  For everyone else, obtaining and maintaining good credit is one of the most important aspects of good financial health and a satisfying life.