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3 Fast Ways to Bring Your Credit Score Up
I thought that opening up a credit card account was the smartest, quickest and most effective way to improve ones credit score. Well according to my mortgage representative, here are three more options that you can do to re-establish credit even more quickly.
- CD Method: Go to a small bank or Credit Union and open up a Certificate of Deposit for $1,000 and ask to take out a personal loan for $500. Let them know you are trying to rebuild your credit. These institutions are paying you a small fraction (1-3%) on the CD yet charging you double digit interest on the loan. They have your money for the term of the CD so it is no risk to them. Take the loan money (don’t spend it!) and pay back the loan within 30-60 days. The bank or Credit Union is not making much interest if you pay off the loan quickly. Bank loans are highly rated so you’ve just added a positive and paid-off trade line.
- Bank loan with a Co-Signer: Ask a family member if they will co-sign a small personal loan to help rebuild your credit. Most family members with good credit will do this as the loan can be small—say $500 as in the above example. It’s not as if they are co-signing a long term auto loan which could put them at considerable risk. Again, pay off the loan over a short period of time and you’ve just added another positive line of credit.
- Become an Authorized User: This method is also known as “Piggy-backing”and has been around as an option for quite some time. The “Big Three” Credit Reporting Agencies (Experian, Equifax and TransUnion) don’t like it at all because they believe it is an “artificial” way for people with bad credit to increase their credit score without having to pay an “actual” bill or debt. Credit card companies are happy to add family members & employees to new accounts as they think it is likely to result in additional charges to the account and generate more revenue for them. Simply ask your spouse or a close relative whether you can be added to their credit card account. They can simply phone the company and ask if they can add you to their card. Through this method you gain all of the benefits of someone else’s payment history! Note: Ensure the credit card you are adding yourself to has a small balance, a good payment history and the person has had the card for at least 12 months.
If you want to get a mortgage or refinance these days, you have to have a good credit. These three methods offer options to speed up the process so you can buy sooner and take advantage of the lowest interest rates in years.
Please call me if you would like some advice or direction on refinancing or getting a mortgage loan, and realizing your dream of homeownership!
