Ask:
ok, after having a crappy credit score from my stupid actions when i was in college, its now howevermany years later and i just never really did anything to improve my score. times are different now, im great with money but since getting married, all the cards, house were opened with dh's credit history.
so ive been thinking, should i get a small loan, like 2k to try to jack up my score? we dont use credit cards and i have all the utilities in my name but that hasnt helped too much.
i dont really need a loan, i just thought i would get a small loan then pay it back in like 3 mos......?
or is there a better way?
i know how to ruin credit ratings, but how do you improve on them?
Answer:
I've always been told the best way to build credit is to open a credit card and keep the balance at less than half the credit limit; best if you have a small balance every month and just pay it off monthly. Always pay more than the minimum. There's got to be someone here who works for a credit union that can give us more ideas! I have a credit card with Providian (I think they're with Washington Mutual), I can pay on-line and they give you an updated credit score every month so you can see your progress.
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The best way to improve your credit is never being late on rent/mortgage, and your car payment (if they are in your name) they are the 3 biggest factors. The second is your credit cards and length of time the accounts have been open and their balance (keeping them under 50 %. The length of time you have held the accounts is a big factor too (the longer in good standing the better).
Do you have any CC in your name? I wouldn't go for the loan, b/c you are borrowing $$ you essentially don't need and why fall into a potential trap? I would get a low interest CC, charge 1 thing a month (gas maybe?) and pay it off immediately (before the end of the month so you don't get an interest charge).
It is not a quick fix, repairing damaged credit is a long process, but it can be done.
All of that said...have you looked at your report recently? I would order a free credit report (from all 3 bureaus) , look it over for mistakes and dispute any of them. That should be your first step if you haven't already done so. If there are items over 10 years old, (5 in NY) send a letter to the agency and ask that the item be removed , By law the debt is only reportable and collectible from the period of 5/10 years from when the account officially went dead from the original lender (if it gets turned over to someone else after that time ;ie collections, it is not longer valid)
I would also order your FICO score, it is an option when you order your report, I think it is an extra $10 to get, but if you have someone run your credit report (say for a home loan or car, ask them what your 3 scores are...the middle/average score is your credit score)....they should tell you, but are not allowed to provide you wit ha copy of your credit report (you can see it, but not have that copy), that is when you should order it from a free site (you are allowed 1 free report per year).
Some credit cards can provide you with a FICO score when you open the account (Providian is mentioned abvove) but beware...they can give you a false sense of security...They only list 1 of your credit scores (transunion) your credit score is actually the middle of the 3 reporting agencies scores, so if Experian says 618, Equifax is a 638 and Transunion is a 675...your FICO score is a 638. That 675 is a false sense of security. Your score could be higher than that as well, but generally speaking Transunion is the highest reporting agency.
I do this stuff all week long (I'm a mortgage specialist) and helping clients fix their credit is my first step in almost every case I handle, if you have any other ?? feel free to PM me! Good luck!
You have come a long way in a very short time (Dave Ramsey-a-holic), you will accomplish this as well!
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When I came to the US in 1999, the first thing I did was open a macys card, they have very loose qualifications for a card, so I was able to get one, I would charge about $100 at a time and pay it off, then after about 6 months we transferred a couple of bills like the phone and cable to my name and I would pay them off in time. Then bought a house and car and we used both our names.
Best thing, will be to get a cc with your name only and use it and pay it off on time. then maybe tranfer a bill onto your name too.
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I have a friend who handles mortgages and loans at the credit union I bank at and he says you should get a credit card but rather than pay it in full every month, keep a small balance for a few months (try to get one w/ 0% intro apr) and show that you can make monthly payments on time, especially paying more than the minimum required. He doesn't recommend getting a loan to build credit, but says on time payments on a cc looks good and builds good credit. Paying it off is good, but he says it's important to show you can make timely monthly pmts as well as not spend a lot on it, keep the balance low.
You can go to: and get your credit reports (all 3) for free, and I think it's around $6 for your credit score from each.
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Why?
Why would you even worry about your credit score at this point? Your lifestyle doesn't need you to improve your credit score. You're doing fine.
I wouldn't spend money (interest charges) to improve my credit score.
DO pull your credit report. If you signed the mortgage papers, you are equally responsible for the timely payment of that debt with your husband.
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Why? Why not...knowing what's on your credit report and your score just makes good financial sense. What if she is contemplating a new home, or a new car, or leaving her husband (not saying you are Kel, just sighting examples). As a responsible adult, you should be aware of these things.
I do agree, I would not get a loan to improve me credit, but I would pull it see, where you stand and take it from there.
Something I didn't mention above and for you to look at also is HOW your score is calculated : 35% of your score is HOW you pay your bills (on-time, late, consistently late etc) , 30% is how much of your credit you are using (are you maxed out on CC, do you keep it under 50 % of your available balance) 15% is your legnth of credit history 10 % is a mix of credit (typically those having a mortgage, car payment, and cc are a better credit risk than those with just CC and no mortgage or rent history, 10 % is your credit applications...how many applications of credit were submitted in the last 90 days?
Keep all of that in consideration too.....
Answer:
I wouldn't get a loan, although I know some people that have. I would open a credit card and charge a small amount monthly and pay it off on time (or early!) every month. This will help you establish a good record and if you pay it off every month you aren't paying huge interest like with a loan. You could even get a rewards card or something like that.