Money Girl

164 Eight Fast Ways to Increase Your Credit Score

Planning on buying something big, like a home or a car, or getting a rewards credit card? First, find out the fastest ways to boost your credit score so you'll qualify for the best deals and save thousands on interest. Like what you hear? Help us out by writing a review at iTunes. Questions go to money@qdnow.com. Thank you!

Broadcast on:: 03 Mar 2010
Audio Format:: other

Building a portfolio with Fidelity Basket Portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics, and managing it as one big, juicy investment. That's pretty good. Learn more at Fidelity.com/baskets. Investing involves risks including risk of loss, Fidelity Brokers Services LLC, Member NYSC SIPC. H5N1 Bird Flu is spreading in poultry and cows. It's rare in people, but bird flu can make you sick. If you work with poultry, dairy cows, wild animals, or with raw, unpasteurized milk, wear protective gear like coveralls, NIOSH approved respirators and eye protection, and wash your hands often. If you start feeling sick, seek medical care and tell them you work with animals. Learn how to reduce your risk at cdc.gov/birdflu, a message from CDC. Hi, everyone, and welcome back to Money Girls Quick and Dirty Tips for a richer life. I'm Laura Adams. Today's show is about eight of the fastest ways to increase your credit score. Credit scores, they're like report cards for grownups. It's a three-digit grade you get on a scale that ranges from 300 to 850. Your score indicates your credit worthiness to potential lenders, banks, landlords, insurance companies, and even to some employers. I'm sure you know the higher your score, the better. You can get your credit report from each of the three major reporting agencies, Equifax, Experian, and TransUnion for free once a year at annualcreditreport.com. But credit reports don't include your actual credit score. You usually have to pay for those. However, I recently joined Credit Karma at Credit Karma.com, where you can actually get it for free. Creditors establish their own guidelines and break points for doling out credit, but here's what credit scores can mean for your personal finances. The credit score in the range of 300 to 580 is a low score. You'll be denied credit or will only be approved for the very highest, most costly interest rates. A score in the range of 581 to 650, you may qualify for credit, but at high rates. From 651 to 710, you'll qualify for credit at moderate interest rates. From 711 to 750, you'll qualify for credit at competitive interest rates. And a score of 751 and up is very good. You'll get the most competitive, lowest interest rates on the market. Someone with a credit score of 550 might be charged an interest rate that's 3 to 4 percentage points higher than someone who scores over 750. That could translate into paying several thousand more dollars in interest for a $20,000 car loan, or over a hundred thousand extra bucks in interest over the life of a 30-year, $200,000 mortgage. That's serious money you could invest for your retirement instead. So what's the fastest way to increase your credit score? Unfortunately, there's no one magic trick that can pump up your score by a certain number of points. Everyone's situation is different, and there are just too many variables that come into play. But don't worry, increasing your credit doesn't have to be difficult or take a decade. As long as you don't have serious black marks on your report, like a bankruptcy or foreclosure, you can increase your score in as little as a month or two by following these eight tips. Tip number one, review your credit report from each of the three major reporting agencies closely, then immediately clear up any errors such as incorrect credit limits, late payments or collection items that aren't yours. Errors do show up on credit reports. As I mentioned, you can get your credit reports for free from each of the three credit agencies once a year at annualcreditreport.com, and you're never penalized for checking out your own credit report or score. Tip number two, always pay your bills on time. Delinquencies have the biggest negative effect on your credit score. If you simply forget to pay your bills on time or are guilty of being chronically unorganized, what are you thinking? I know a better way. Consider setting your bills up for automatic withdrawal from your checking account. If you have overdue bills, make plans to get them caught up. Did you know that having an account go to a collections agency is a blemish on your credit report that stays there for up to seven years? Tip number three, pay down your credit card balances. Reducing your overall debt that's on your credit report is an effective way to jack up your credit score, but if you don't have the funds to do that, consider taking a loan from a family member or friend. That doesn't reduce what you owe, but it does move debt off your credit report and give your credit score a quick boost. Tip number four, don't close unused credit card accounts. Cancelling a card can actually lower your score. For more information about how that happens, listen to show number 147, titled, "Does Cancelling a Credit Card Hurts Your Credit?" A better strategy is to occasionally use your older credit cards so the issuer doesn't stop reporting your information to the credit bureaus. Having a long credit history helps increase your score, so remember that hanging onto older cards is a good idea. Tip number five, never max out your credit cards. A good rule of thumb is to keep your balances below 30% of your credit limit, even if you pay them off in full each month. For example, if you have a card with a $3,000 credit limit, don't rack up a balance that exceeds $900. It's better to have two cards with balances that are each below 30% of your limit than to have one card that you consistently max out. Tip number six, do your loan shopping quickly. Since your credit score gets pulled when you shop for a loan, submit applications to potential lenders within a two-week period. Having lots of inquiries can decrease your score, but the system won't treat a cluster of credit inquiries for a car loan or home loan, for example, within a short time period unfavorably. Tip number is a great month for planning. We start thinking about the rest of the year, whether it's back to school, big year-end work projects, holiday plans or travel. Planning ahead is crucial in life, especially when it comes to what happens when you're gone. Getting life insurance may sound daunting, but policy genius makes the process a breeze. With policy genius, you can find insurance policies that start at just $292 a year for a million dollars of coverage. Some options offer same-day approval and avoid unnecessary medical exams. Policy genius's technology lets you compare quotes from America's top insurers in just a few clicks to find your lowest price. It's the country's leading online insurance marketplace. And if you ever need help or guidance, they have an expert license support team to answer your questions, handle all the paperwork, and advocate for you throughout the process. It's never too late to plan ahead. Go to policygenius.com or click the link in the description to get your free life insurance quotes and see how much you can save. That's policygenius.com. Buying a home is one of the biggest financial decisions you'll ever make. Before you tour a home, the real estate professional you're working with may ask you to sign a buyer's agreement, which describes the services you'll receive, each party's role and responsibilities, and how your agent will be compensated, all of which you'll want to discuss with them up front. So work with an agent who's a real tour. Real tours are members of the National Association of Real Tours, with a duty to honestly represent you and put your interests above their own, because that's who we are. My dad works in B2B marketing. He came by my school for career day and said he was a big row as man. Then he told everyone how much he loved calculating his return on ad spend. My friends still laugh at me to this day. Not everyone gets B2B, but with LinkedIn, you'll be able to reach people who do. Get a $100 credit on your next ad campaign. Go to LinkedIn.com/results to claim your credit. That's LinkedIn.com/results. Terms and conditions apply. LinkedIn. The place to be. To be. Tip number seven. Get a secured credit card. If you have no credit history or a low credit score, a secured card can help you build your credit if it reports information to the credit bureaus. You have to dish out an upfront security deposit of at least a couple hundred dollars, which the card issuer holds as collateral. Some secured cards will extend you credit after you show responsible use for a minimum of six months. Check out the Public Savings Bank Visa, which is a secured credit card that offers zero percent interest on purchases for six months with no annual fees. It reports payment history to each of the three credit agencies. I'll include a link to the card on the blog at moneygirl.quickandertietips.com. Tip number eight. Get a gas store card. Even though you may want to buy more than gas, beer and snacks on credit, those types of cards can be easier to get than regular credit cards. And if you're trying to establish a credit history, making small monthly charges that you pay off info and on time each month will work wonders for boosting your credit score quickly. How to improve your credit score is just one of the essential everyday money topics I tackle in my upcoming book, Money Girls Smart Moves to Grow Rich that's coming out in September. I just saw the great cover design, which was really exciting. The book is a modern yet common sense approach to take charge of your finances and whip them into shape so you can build wealth. It's loaded with advice and tips about choosing the right bank accounts, setting your financial goals, planning for retirement, buying real estate, paying for education, lowering your taxes and so much more. If you haven't already subscribed to the podcast, remember that it's free, easy and doesn't require an iPod. An iTunes subscription allows you to automatically get each new episode as soon as it's published. That way you'll never miss a show and you'll get extra free content as we approach my book release date, so don't miss out. Go to iTunes.com, download the free software, search for Money Girl and hit the subscribe button. Also, stop by and become a fan on the Money Girl Facebook page. You'll get more show information, money tips, financial news and updates from me. I'm glad you're listening. Cha-ching! That's all for now. Courtesy of Money Girl, your guide to our richer life. Like any good agent, we're here for the open house. For the closing, for handing over keys. But because we're real tours, we're here for so much more. Agents who are real tours volunteer at nearly three times the national average. We're working to broaden access to credit, increase affordable housing supply and ensure fair housing for all. And real tours are bound by a code of ethics. We're here for it all. Real tours are members of the National Association of Real Tours. That's who we are. Earning your degree online doesn't mean you have to go about it alone. At Capella University, we're here to support you when you're ready. From enrollment counselors who get to know you and your goals, to academic coaches who can help you form a plan to stay on track. We care about your success and are dedicated to helping you pursue your goals. Going back to school is a big step, but having support at every step of your academic journey can make a big difference. Imagine your future differently at Capella.edu. [BLANK_AUDIO]