Improving your credit score(Experts only please)?
This question is for experts only.I have cleared all the derog from my credit and all three bureaus show as paid on all outstanding debt. I currently have an average of 590-610 score on all three EFX,XPN,TUC.I have a $1900 deferred student loan.And I have a $15,000 auto with FMCC that show six of current payments.My score was in the low 500's before I put the auto loan on there.If I drop the student loan will my score rise faster and what else can I do to get my score to rise faster.
Public Comments
- Expert at what? Borrowing for crap you can't afford? Yeah, I used to be great at that. Now I live w/o borrowing. I look forward to paying off my house in a couple of years & getting to have a ZERO credit score b/c I will have had no open credit accounts for a good while. Let me tell you something that was very hard for me to grasp, but has revolutionized my life: Car dealers, colleges & Macy's ALL take CASH. I have not borrowed at all since 2002, yet I have everything I need. I make the money I have behave (budgeting), so I don't need to borrow any from anyone else. You should try it. I promise that it is a BLAST! My car insurance is dirt cheap b/c I carry only liability; I have money on hand to replace or repair said car the minute it starts giving me trouble; I never fight w/ my hubby about money & my kids will never have to support me in old age. I got to this point by following Dave Ramsey's "Total Money Makeover" book. I know lots of other people who are doing the same. I hope you will, too.
- Instead of paying off the student loan all at once make several large payments spread out over 6 months. The bigger payments will count towards your FICO scores and the decreasing balance helps. Next start making more than the minimum payments towards the auto loan and then apply for a credit card and make small purchases on that never more than $300 a month. The key is that all payments have to be on time or before the due date and make sure that all creditors are reporting your timely payments as a lot of companies will not report good customers as they want to retain them for themselves. Good luck.
- Ask your creditors to write a letter to the three agencies, stating that something favorable to be written on it. Like, "paid on time", or something similar. Even ask your utilities company to write a similar letter. Your student loan will stay on there till it is paid. And it will be on for 7 years more.
- Open a savings account and consistently put money in it. I am assuming that you can pay off the student loan with funds on hand. If this is so, do it and make payments to your savings each payday. As soon as there is enough funds, invest in real estate. If you own a house, pay down the mortgage. If you are renting, buy a house. BUY WISELY, this means buy a property that is well below the value of the community (WORTH A WHOLE LOT MORE THAN YOU ARE PAYING). This raises your net worth and your credit score. I have never earned over $50,000 in a year. My net worth is almost $200,000. My Current mortgage stands at $295,000 - If all is paid at fair market value, I would be rich. My bank account is less than $2,000 - I don't have money but I can't say I am poor.
- Pay on time. It takes time to rebuild credit and improve score. You don't decide what is on your credit. What do you mean by if you drop your student loan? Positively paying on your student loan will help your credit. Mostly just continue to pay on time. 6-12 months of current payments should increase your credit score. Get information on what makes up your credit score as well.
- I'm assuming that you're student loan is a federally issued one such as Stafford. If so, then the combination of it being a low balance and being federally secured means that it really doesn't impact your overall credit very much. Continue making on-time payments towards it. Double payments if you can afford to do so, just for the sake of eliminating the debt faster. If you have a chunk of money sitting around, drop it on your auto loan. That $15K is counting against your debt-to-income ratio. Reducing the debt or increasing the income helps your credit more than anything else. Paying down the car will also help you create positive equity on it so that when you're ready to trade it in or possibly re-finance to a lower rate, you'll be able to do so.
