How can I raise a low credit score?

Question

My credit score is 372. I have a car repo and LOTS of cards and loans. the repo is already written off and my card accounts are closed. I am getting $22,500 in january and would like to fix my credit then. Is it best to pay off everything in full? someone told me not to pay off all my accounts. My payment history will still suck even though my debt to income ratio will be ok. what can i do to raise my score with this money? should i do debt consolidation and make payments instead of paying everything lump sum? i have from january until december to get it ok because i want to finance a new car. HELP!

Answer 1

You're right. Paying off the debt is not likely to help you raise your score because they'll be on your account from here on out for the next 7 years. Start by cleaning up your credit report by getting a myfico full credit report and contacting the companies to have them remove incorrect information or update anything you feel is inaccurate. A lot of times reporting companies don't report the right info. Make sure from here on out you are responsible with your bills -- now is a great time to start slicing up all your credit cards to resist the temptation of using them. Don't close any credit card accounts unless they are charging you annual fees and don't close any accounts until you've paid the balance on them off.

When you're trying to build a solid credit score it's important to get a comprehensive view of what is actually effecting it...
Your Credit Score (also known as your MyFico score) is calculated with the following breakdown:
35% - Payment History
30% - Credit to Debt Ratio
15% - Credit History
10% - New Credit
10% - Credit Types in Use

I raised mine to well over 700 points fro 500 using these steps in less than a year -- :

# Know and Track Your Credit Score (be sure to sign up for the free trial of your credit score tracking listed below. It really helped my get my score up.)
# Never Miss a Payment, Starting Today
# Never use more than 20% of your Available Credit
# Keep Credit Cards that Have No Annual Fees Open For as Long as Possible
# Extend Your Credit Limit on Cards You Already Have before You Get New Ones
# Get Credit Cards that Have CashBack Rewards to Contribute to your Balance
# Transfer Your Balance to a Credit Card with a Lower Interest Rate and a Higher Available Credit-
# If You Think You Are Going to be FORCED to Pay a Bill Late Ask for an Extension or Payment Plan
# Take out a Small Personal Loan and Repay it Over a Year
# Ask Someone With Good Credit if They will Account Shadow you

Read more here from my blog :
10-Ways to Boost Your MyFico Score
http://millionster.com/articles/debt/increase-fico-credit-score/

I know you'll be able to fix this problem, just use some of my tips I listed and use the resource links here to help you get the info you need!

Answer 2

Darnell is confusing a credit report with a credit score. The reason your score is low is because you max the cards repeatedly. As long as that continues they will remain low. What this says to a creditor is that you rely on high limits to get you through the day and there is a risk that one day they will be maxed and never paid. You should not be using your personal credit for your business. That brings on more liability than just a bad credit score. You should consult a CPA about separating you from your business and setting up a proper credit line.

Answer 3

Credit history, credit score, credit report-- these words will greet you sooner or later when you apply for a loan, mortgage, rent an apartment, apply for a job, or last but not the least apply for a credit card. Efforts towards building a good credit history should begin early, right from the student life. Ironically most of the students are not aware what is needed to build a credit history. Here we look at three simple steps that can get you a jumpstart towards good credit history.

1. A checking or savings account

Begin with opening a checking account in your name. This is the first step towards acquaintance with banking and financial institutions. The idea is to open a bank account as early as possible, keep it in good standing, and it should reflect financial stability. And yes, the bank account should be in your name. Don't open and close bank accounts too frequently as this is perceived wrongly by credit reporting agencies. If you open a savings account, the money deposited in it can be used for security purpose when you want a loan.

2. Start paying the bills with your name

You need a mobile right? Go ahead and get a connection in your name and pay the bills so that they build credibility to your name. The way you pay your bills matter the most. If you pay everything on time and in full, a good credit history is waiting for you. The converse is also true. If you start faltering on your bill payments it will reflect badly on your credit history and you will definitely face problems while getting good credit cards and loans on cheaper terms. Read more from: http://www.credit-card-gallery.com/article/234,Start_building_positive_credit_history_in_3_simple_steps

Answer 4

You need to learn how to spend money.

Dont' spend the entire $22,500 on paying off debt.

I recommend you put 10% in a high interest savings account. That's $2,250. Start the HABIT of always paying yourself first.

Then invest another 10%. Set it aside along with the savings until you decide where to place this. You need to create additional income so you can not just pay off your debt now but always. Your money should make you money.

See:
http://urlfreeze.com/1/PayRaise/ & http://www.Goodshephard.Free1up.com

Start paying off the bills (credit cards and loans). Pay more than the minimum. Pay off the small ones entirely ($500 or less).

Cut up all your credit cards except the one with the lowest interest rate and smallest balance.

Pay everything in cash.

Take a grocery list when you go to the store.

Eliminate spontaneous spending.

*Read the Automatic Millionaire by David Bach*
*Read the Automatic Millionaire by David Bach*
*Read the Automatic Millionaire by David Bach*

This $22,500 gives you a second chance. You're living above your means. Take time to wisely improve your income status.

Proactively learn how to change your mind about the way you spend money. If you don't - you will be back in the same situation all over again.

Good luck!
http://www.SoGettingRich.com
*weblink at end of this book guides you on how to improve your credit score in 45 days*

Answer 5

Before you believe anything that a banker/lender has been drilling us for years, I suggest that you watch "Maxed Out".

But as far as what you have for debts, pay off EVERYTHING in full. Do not believe anything else. People with bankruptcy can get loans and credit cards months after filing, in fact they are highly wanted. Pay everything off and live within your means. Everything else is suicide.

Also why a new car?!!! The depreciation price is awful! Get a reliable, well maintained used car. The amount of money that you will have to spend to maintain an older car FAR outweighs what you will have to dish out for a new car with insurance and the car insurance itself.

But hey a 2008 with all the bells and whistles for say...35,000 and then in 4-6 years is worth 1/2 that but will be excellent for maintenance and still eligible for the bumper to bumper warranty that you can get. It's your debt I guess...

Something to think about. You like a certain type of car, you like the old style and the new style but you think new makes a difference/statement. If you go with the new car, it depreciates 50% of its value in say, 3 years. If you buy a car thats 3-4 years old, yes that will depreciate as well but instead of depreciating 17,500 in 4 years, it may fairly drop 8,750 in value in 4 years. How much value do you want to lose in 4 years time? AND that 17,500 that you saved in depreciation can be put in repairs. If you have the bumper to bumper warranty, even better. Say a transmission goes and its 2,500 to replace (and you foolishly skip the bumper to bumper warranty), you still saved 15,000 by going used. Something to think about at least. The only downfall with used cars to also consider would be say a car 10 years from new can be pristine, but has depreciated so badly due to millage and to its demand that if you were in an accident and totaled the car and it wasn't your fault, the "totaling" cost is based on the value of the car retail wise, not what it means to you. So if the insurance company thinks its going to cost 10k to fix a car in a bad accident but the car is worth like 5,000, you are only going to get a check for 5,000 for the car. Stinks doesn't it? So there are things to consider/weigh but IMO, used is the way to go.

Answer 6

Pay off your credit cards and loans before you even consider getting another car. In your situation you should probably just get a good 2 or three year old used car and save up and pay cash for it.

Answer 7

Find a financial adviser, credit counselor, etc. in your area, make an appointment, and discuss your situation. If you have dealt with a local bank, ask them for a recommendation of which one to use.

Answer 8

I had a 380 credit score , someone recommended me this company http://www.financeconsultant.org/creditrepair.html and they managed to help me improve my credit score to 530.

Answer 9

Looking for an answer on this too

Answer 10

that's a tricky question