What have you done to improve your credit score?

ENS Private RallyPoint Member — Sun, 20 Nov 2016 15:32:18 -0500

My credit score is finally back in the 700s! My goal is 750 or higher. What have you done to improve your credit score?

Response by SPC Erich Guenther made Nov 20 at 2016 3:55 PM

SPC Erich Guenther — Sun, 20 Nov 2016 15:55:01 -0500

Pay off debt or increase income are the two easiest ways.

Response by SSG Private RallyPoint Member made Nov 20 at 2016 5:36 PM

SSG Private RallyPoint Member — Sun, 20 Nov 2016 17:36:19 -0500

pay your bills on time have a credit card that you pay off at the end of every month if you use it. Don't go out and get a credit inquiry and apply for everything with credit. Have a budget and stay with in it, don't over spend.

Response by SGT Private RallyPoint Member made Nov 20 at 2016 5:55 PM

SGT Private RallyPoint Member — Sun, 20 Nov 2016 17:55:31 -0500

Clean up credit reports.

Response by SGT Jerrold Pesz made Nov 20 at 2016 5:56 PM

SGT Jerrold Pesz — Sun, 20 Nov 2016 17:56:41 -0500

Paying off all of your bills is NOT a good way to raise your credit score. I don't really care about my credit score because I normally pay cash for everything including my house and cars but I do check it occasionally since my bank puts it on my statement. Normally my credit score has been around 820 when I owe money. When I paid off everything that I owed my score dropped about 25 points and the explanation that they put on the report said that it was because I have no big debit. Paying off your bills and paying everything in full every month can actually hurt your score.

Response by SFC George Smith made Nov 20 at 2016 6:53 PM

SFC George Smith — Sun, 20 Nov 2016 18:53:11 -0500

clean up all debts and keep every thing paid off

Response by SPC Bob Roebling made Nov 21 at 2016 9:46 PM

SPC Bob Roebling — Mon, 21 Nov 2016 21:46:58 -0500

My credit score was down in the high 500's about 4 years ago, I'm sitting at a 710 now. For me it took a lot of patience. I was on Credit Karma monitoring my credit every so often, although the figures are not official credit scores they give you ballpark figures, give or take 10. I utilized a financial advisor through USAA in getting in a routine and setting a path for me to break 700.

Get Rid of the Old Stuff
What I noticed helped the most was just tying up any lose ends, for you this might be delinquencies, high credit card utilization, unpaid bills, loans, etc... Debt to income ratio plays a big part especially when trying to get a loan.

Dispute What Isn't Yours
After paying off old credit card debts, I started going through Credit Karma with a fine tooth comb, I was able to find a few old accounts that needed to be paid off and took care of those. I disputed accounts I was not familiar with and had those taken off. Do not take off old accounts that are in good standing, those are your best friend when trying to raise your credit score.

Out With the Junk
Once you have the lose ends tied up, get rid of all of your credit cards, store credit cards (Walmart, JC Penny, etc.), and secured credit cards. You want a good card such as a local bank credit card. If you are having trouble, you might check out PayPal credit.

Get Pre-Approved
Stay away from places that do a shotgun credit check, that is, they check 10+ banks to see if you can get a loan, get pre-approved by a single bank beforehand. There are two different types of credit checks, a soft-check which is done by Credit Karma and other free monitoring tools, and a hard-check done by just about everywhere else. Hard-checks are bad, each check costs you about 3 points. Getting denied doesn't get rid of it, getting approved and starting an account nets you about 15 points so shotgun credit checks never put you ahead.

Napalm spreads
Watch out for high interest rates, you'd be surprised how much of a difference 3% interest vs 6% interest costs you. As an example 26,000 at %3 might cost you $350 a month to cover principle + interest, the same loan at 6% will cost you nearly $600 a month, this means that if you pay the minimum, you are practically doubling your initial loan when you end up paying it off. Banks love you for it too. However, if you can get interest knocked down, you are definitely in much better shape and have a better chance of getting something paid off at a lower price. If you are a disabled veteran you can get your taxes on your house knocked down up to the same percentage as your disability rating this means if you are 70% disabled and you have $1000 property tax, you only have to pay $300 of it. You also get discounts on registration for your car. This saved money can help you with your debt.

Watch What You Spend
Never, ever, EVER, put money on a credit card than you can pay off before the end of the month, think of a credit card as a cash advance on your paycheck. Start a budget and stick to it. You should know where every single hard earned dollar goes. Some banks offer budgeting tools to automatically sort through your expenditures and will sort them and graph them out so you know how much you are spending in each category. Set an amount and stick to it. If you know how much your bills cost, enroll in Autopay if you have enough reserves. It takes your mind off of what needs to be paid and allows you to think about your budget and how you can improve it so you are saving more money than you spend.

Patience Grasshopper
Patience is the key, just because Credit Karma updated last Friday and your score didn't change doesn't mean it isn't working. Most places report every 30 days, others report every 90 days (quarterly). Check your score once a month around the same time. It's won't magically change unless you look at it 6 months later after being diligent. At one point I saw my credit score jump 70 points just by paying my bills off and because I got approved for a higher loan in one of my accounts.

Things Happen
Sometimes it's unavoidable and you have to let your credit card roll over to the next month because of an emergency expenditure, not a big deal, just make sure you hold off of using that card until its paid off.

The Right Things to Buy With Credit
The best thing to do with a credit card is use it as a gas card. Just buy gas on it only. This will ensure the balance is low enough to take care of and it ensures you can get to work in between paychecks. Don't use a credit card to buy the next Xbox or Playstation. Don't use it for Christmas gifts. These are for sure going to roll over and now that $500 Xbox costs you nearly $520 the first month, the second month it becomes $550 because the interest you pay is compounding.

Invest, Invest, Invest
Just like credit card companies hit you with interest and cause you to pay way more which ends up hurting your credit, you can get ahead of the game. If you applied for VA Benefits and FINALLY (after all these years) got your money, use it to get rid of your existing loan defaults, pay off your credit cards that are way too high for you to pay down, and INVEST it. Mutual funds are good but make sure you have a good stock broker whom you can trust to help you make a good decision. It locks away your money for a few years but when you get it, you'll have more of it. Never EVER touch the principle and use the interest gained to pay off some of your bills. Reinvest and repeat. Although investing will not help your credit score while it's not doing anything, it will help your debt to income ratio when you report the earnings on your taxes. If you have a large return and you are maxed out on your dependents on your work paycheck, be prepared to pay money to the government, they get to tax you on earnings made, they will never take all of it, but it can help to make your debt to income look slightly better.

50K Road March
It's a long hike for you if you are just getting started, but stick with it and keep a goal in mind. Set a reachable number and read up in other places on how you can improve your financial knowledge. Investopedia.com is a good resource that I use. Set small goals if you don't have a lot of patience. if your credit score is borderline 600, set a goal for 650, when you hit that mark aim for 700, then 750, then 800, and the goal you will eventually find yourself is 850, the magic perfect number you may never achieve because it's the Medal of Honor of credit scores.

Bring It All Together Now, or Not
Debt consolidation, sounds great right? You get all of your loans paid off and put into a nice shiny new account. WRONG! Debt consolidation is a terrible way of dealing with debt and here's why. Let's say you have a bunch of student loans ranging from 3% to 6%, your high dollar loans (6k+) are at the 3% and your low dollar loans are at 6%. And you want to consolidate them all into a 4% loan. Well you benefit from your low dollar loans because they all go down 2%, but all of those 6k+ loans are now a percent higher, you end up having to pay more for those loans. If debt consolidation is something you still want to do, make sure that you only consolidate the loans that are high dollar amounts into a lower interest rate and only if the proposed interest rate is much lower than your current rate. Otherwise do what is called the snowball effect. Pay off your high interest loans first one at a time, while paying at least the minimum on your other loans, and when an account is paid off, take the money you used to pay down that account and roll it into your payments on the next account. Keep doing this until you finish paying off your loans. It is a much better way to deal with them and can help get that debt to income ratio down faster.

The Disclaimer
I'm not an expert by any means, these are just things I've picked up from various sources and things I've put into effect in my own budgeting to help boost my score. I can't promise you that you will see a 110 point increase over 4 years like I did but this should help with getting you prepared for the fight ahead. My sources include Bachelors of business and personal finance, USAA financial advisors, old people with a nice retirement nest egg, and my own struggles in clearing the smoke.

Response by PO2 Chris Wright made Dec 1 at 2016 1:41 PM

PO2 Chris Wright — Thu, 01 Dec 2016 13:41:31 -0500

The only time credit is useful is when you need it to purchase a house. If you’re financing a car, you’re buying more car than you can afford. Everything you can put on a credit card, you can buy in cash. So the only time you need a good credit score is for the two or three times in your life that you buy a home. As you save for your downpayment, a year before you’re financially ready, contact a lender to help you increase your credit score. Within twelve months they can easily put your score where it needs to be as long as they don’t have to overcome negative remarks. Even then, they can help quite a bit, but if you don’t use credit then you won’t have negative remarks. You’ve been sold on the idea that you need credit. It’s a lie to help banks make money. Don’t fall for the marketing and be responsible. You’ll never owe anyone anything and your life will be better for it.

Response by Jeff Lofstead made Aug 14 at 2017 3:34 PM

Jeff Lofstead — Mon, 14 Aug 2017 15:34:40 -0400

I actually help people to build great credit while removing there bad stuff.