Hi all, I'm in the process of negotiating/paying off old, charged off debt. I'm also doing whatever I can to build my credit worthiness in the meantime. I've been borrowing and repaying small, short term loans from my credit union (its a modified 'payday loan' that they report promptly to the CRA's - $500 loans paid back over 90 days in 3 installments - and relatively low fees). I'm doing this because I believe that it will show several unsecured loans in good standing or ''paid off." Is my reasoning correct? Any other ways to build credit score fast? Thanks, Ben
In my experience, credit is something that takes time to build and there's no "Fast Fix". You can certainly do things that will give you short term bumps, but it's the long-term lifestyle changes that result in good credit. As far as the loans, that's sure to help more than it hurts - over the longer term. It seems to me that the perfect credit model is someone who last opened an account in 1932 and has 1 mortgage that's 50 years old, a single installment loan, and 2 credit cards (since 1932) with perfect payment histories on all and less than 15% utilization of the credit cards. The further you get away from that model, the less likely you are to have perfect credit. Two things that are going to work against you in your strategy are 1) They'll show up as recently opened tradelines. 2) As recent tradelines back to back, they'll lower the overall age of your credit file. Installment loans can be tricky. An installment loan can help you under 2 circumstances that I know of: 1) If you have no history of Installment loans, TU and EQ will tell you that you need an installment loan to show "breadth" of credit experience. 2) If you've had an installment loan in the past that was paid perfectly. I think credit repair is a battle fought on many fronts. First, you should make sure that from this point forward you maintain a position to pay all of your debts on time and keep credit card utilization under 15%. If you can do (or are doing) that, you're on your way. Next, you need to address issues on your credit report dealing with the most recent and greivous issues first (older items won't hurt you as much and consequently resolving won't help as much as newer items). Start by cleaning up personal information such as addresses so that your future disputes will go smoother. Then grab the ugliest recent item and start negotiating. Go for total deletion as a goal. Once you have a mortgage, installment loan, and a couple of credit cards on your profile, you don't really need additional lines unless the credit card limits are really low. You need items that show creditors trust you. If you don't need new tradelines, don't open them as they lower your average age and show as a recent opening. The old adage about credit is you have to prove you don't need it before you can get it. That's about all the wit I have on the subject. I'm sure others can address specific techniques that might raise your score quickly. If you're maxed out on your credit cards, a quick fix is getting them paid off. That has a tremendous effect on your score.
It will work over an extended period. You need first to dispute the derogatory items now reflected upon your reports. Dispute specific inaccuracies such as dates of status, account history, account status, etc. Secondly, you need to establish some revolving accounts if for nothing else utilization purposes. It's doubtful that you would qualify on your own absent at least a 610 scores. Sure, you can get an Orchard or First Premier, maybe a Cap One but these are not going to help you in terms of utilization, history, etc. In fact, they "may" temporarily hurt you until they hit the six month mark. I would advise you to ask someone to add you as an authorized user on a card or two "if" the account has never been late and exhibits good utilization. If that isn't a viable option, their are companies which offer this service. Be sure to check them out before contracting with one over another. Many are of ill-repute.
