Luckily came into some money and have the means to up our family's credit scores as fast as possible. Any tips and plans that worked for you or others you know that you could share with me so we can get the ball rolling? Things to avoid that are marketed as great increasers? We are really trying to avoid the quick-fix bullshit and go the tried-and-true route. Immediate goal is to buy a house with a nice down payment, yet our scores are sub-600. Will be reading much in regards to finances, so please excuse the newbie questions and lack of terminology... I plan to be here for a while and those that know me from other boards have seen me grow and contribute...
There really is no quick fix way that I am aware of because those who evaluate your credit do so on a long term basis. Given that you are starting at a 600, you really don't have that far to go, so if you use the money to get out of debt first, you will be on your way. Then, just focus on building your net worth by living on less than you make, and saving steadily over time. As your savings continue to grow, you can begin investing in your retirement, but I would suggest having an emergency fund of 3-6 months of living expenses first. If you use these techniques, you should be able to see your scores where you need them in as little as 2-4 years, but I would make sure you have a really nice down payment before you buy the house because you want to make sure you don't get yourself in trouble again. If you can live debt free, it is so much easier to grow your wealth.
Pay off any bad debt. Keep a credit card open, use it for small purchases once or twice a month, and pay it off each month. Don't go overboard with borrowing, and don't get too obsessed with your score. You'll eventually see it rise if you keep an open credit file with one line of credit and have paid off any bad debt. Don't fall into that trap of going out and getting 5-10 credit cards in any attempt to try to raise your score a little. Just let it come up over time by being smart with credit.
Try and lessen the number of new accounts you are opening. The average age of all of your cards is taken into account when you are credit checked, so if say you had 1 card which you've had for 7 years and 3 which you've just opened in the last month.Your credit score would be lower based on you opening so many accounts even though you had one open for such a long time.
My wife has one that's been around for years, I have none. I was planning on getting a secured card with a decent deposit to start building mine up. Is one each enough for us to maximize our score increases?? I was thinking we get a joint card together once we get out of the "secured only" realm. Thoughts?
I would begin by establishing an emergency fund (6 month minimum) and deal with any negative marks on your credit. If you have anything in collections, deal with those. Then I would limit credit card utilization to about 30% of your total open credit lines. For instance, if you have $10,000 worth of open lines of credit, try not to keep a balance on the cards over $3,000 for an extended period of time. Pay off the cards you can, and your credit score will work its way back up.
If you have credit cards on file right now, pay them down so they are all at a 50% or less balance. This will give you slight improvement. Also, pay off any old outstanding bills or collections you may have. Once that is done, make sure you pay everything on time and save the rest of the money so that you have a decent emergency fund. Suze Orman always says that it is almost pointless to save money if you are in debt, so take care of all outstanding debts first and avoid getting new debts.
I always made the point to pay with credit cards for my groceries even though I had the money in my pocket. I pay with my credit card and, and just before I get charged the finance fee, I jump on the computer and pay for it online. Those small little charges and payoffs add up in the long run. If you can, try to pay all your bills with the credit card and pay it off before the finance fees kick in. But, big but here.........keep track of what you charge and make sure you have the back up funds to pay it off.
It might seem like an obvious answer out paying off any debts you owe would be the best first step. Your credit score won't improve over night, it's always going to be a slow process, but the less defaults you have on file the better. When the debts are paid off, it can take some time to reflect on your credit score, but in time you will eventually see a difference.
I have the same advice: pay off any debts right away. When you get approved for a loan you better have a plan to pay it off and try to reduce the amount of accounts you open. As much as possible get only 1 or 2 credit cards and be responsible about the way you spend it. Basically just be in charge of your finances, pay on time and watch your credit score soar in the long term.