One of the hallmarks of an orderly financial life is a solid credit score. Most working adults have three scores, one from each of the major bureaus, Equifax, Experian, and TransUnion. While the numbers can be a make-or-break factor for loan or mortgage approval, there are not cast in stone. In fact, with a bit of perseverance, it’s possible to improve all three ratings in the span of less than a year. Unfortunately, there are many online scam artists and fly by night companies that offer to help people raise their scores in exchange for substantial fees. These illicit purveyors are best avoided. Not only are they a waste of money, but you can do a decent job of upping your credit scores without outside assistance or out-of-pocket expenses. Here’s how to get the ball rolling.
Refinance College Loans
For millions of working adults, the number one personal financial goal is increasing their credit scores. That’s partly because doing so helps them improve their overall situation. Not only does a solid credit rating make it easier to obtain a car or personal loan, but it can save a home buyer thousands of dollars on lifetime mortgage payments. By refinancing student loans, people can take the first step to lower their monthly expenses and free up funds to pay down credit cards, auto loans, and other consumer debt. A refinancing agreement is a fast way to boost monthly cash flow by replacing one or more college loans with a single, brand-new one. In most cases, the refi comes with not only lower payments but more time to repay the total balance.
Become an Error Detective
Order your annual free reports from all the bureaus and study them carefully. This is a great way to come back from a bad credit score record. Errors are common, so hunt for any debts that do not belong to you. Make hard copies of the reports and draw lines through listings that are correct. Don’t overlook anything, and don’t stop until all items are eliminated. If any remain, report them, in writing, to the appropriate bureau immediately.
Pay All Bills on Time
The bedrock principle of creditworthiness is timely bill payment. Once you embark on a course of improvement, don’t sabotage the potential results by missing common payments on things like cars, charge cards, personal loans, utility bills, etc. On-time bill payment is one of the few factors that have a high impact on total ratings, so set up a reminder system for yourself to make all recurring payments at least one week in advance.
Use a Secured Card to Rebuild
Most banks, credit unions, and major credit card companies offer one or more versions of secured cards. Most come with relatively low limits and require holders to place that amount on deposit before the card is issued. Remember to pay off the entire balance each month. Also, only apply for offers that come with low fees and report to all three bureaus at least four times per year. It takes about six months for this technique to reflect on your scores, but it’s a bulletproof way to increase scores by a significant amount over the course of a year or more.