| Hi Taylor
- Is it possible to improve my credit score in a hurry? I'm trying
to get a small loan but only have so-so credit, and wondering if I
can get it up by 100-150 points in a few months or if it'll take years
and years and I should give up on the loan. Thanks! - Esteban
Hi Esteban - It's definitely possible. It all depends on what's
currently affecting your credit score and how many tools you have
at your disposal. I'll throw out some credit score tricks, and you
can see if any of them work for you.
utilization. This is probably the biggest thing under your
control, and it refers to the balances on your current cards/other
loans that report to credit bureaus. Essentially, you want your
credit use to be no higher than 10 percent of your total limit
(and ideally less than 7 percent for credit score purposes). If
you can get those balances down, you can see your score jump up
in just a month. Probably not a full 100 points, but the credit-to-debt
ratio is a huge factor when it comes to your FICO score. Aside
from making big payments to lower those balances, you can also
request higher limits on your credit cards to put the ratio more
in your favor.
2. On-time payments. Missed payments hurt your credit score
faster than anything else, but you can recover and recoup. If
you paid late on a credit card or other loan, make the payment
and then try calling the creditor to see if they'll do you a solid
and not report the late payment to the bureau. To avoid this problem
in the future, make sure you've got automatic payments set up.
It's a little risky, but you can also consider taking out a small
P2P loan for the sole purpose of paying off existing balances.
This tactic doesn't work for someone drowning in debt, but rather
if you have decent income and just need to show your ability to
make on-time payments to all your lenders.
3. Get credited as a renter. It doesn't work for everyone,
but you can have rent payments reported by your landlord. You
can also have utility payments reported to the credit bureaus
by those providers. Most people stay focused on credit cards and
loans, but it's possible to use other monthly payments as a way
to make yourself more appealing. Not every creditor accounts for
rent, but it's worth a shot if you're looking to change your score
in a hurry.
| Don't expect
your FICO score to get awesome over night. Bad credit scores like
to linger, so you need to stay patient and keep putting in the work.
Nevertheless, a multifaceted effort like this has the potential to
turn bad credit into passable credit faster than you might expect.
Good luck, Esteban!
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.