By Philip Tirone of 720creditscore.com.
Every other week, I hold a question-and-answer session for the students in my credit-education program. Usually, I help people with their specific credit situations, give advice, and answer questions about the program.
The other week, though, I was fortunate to have Anthony join the call.
When Anthony started my program three months ago, his credit report was peppered with collection accounts and a judgment, so his score was about 580. To give you an idea of how that fares, anything below 620 is considered bad credit. So Anthony was considered the highest-risk borrower.
But today, just three months later, his score has jumped 60 points.
I tell my students that they should usually expect to wait about six months before they start seeing a significant jump in their credit score. But Anthony has followed all of my advice to the letter. And his score is on its way up, and fast.
Here’s how he did it:
First, he got a secured installment loan from a credit union. He was denied a few times, but Anthony was persistent. Finally, he found a credit union (Cal Coast) to give him a $600 secured installment loan. He put this $600 into an account at Cal Coast, deposited another $6 to cover the fees on the loan, and he uses the account to pay off the loan–$101 a month for six months.
This is a great tactic because it means the credit unions have no risk—after all, he’s keeping the money in the bank. And it helps you, the borrower, increase your credit score by paying the installment loan on time.
Anthony has made just three payments, and his score is already on its way up.
He also opened three new secured credit cards. He keeps a balance on these cards, but only so that they remain active, and he pays his bills on time.
“It’s amazing how simple it is once you know the rules,” I said to Anthony. “If you don’t know the rules, though, it’s just unfair.”
And that’s when Anthony said something that was my favorite part of the call. He said, “If you take the emotion out of it and you take it for what it is—a numbers game—then you see that there are tactics to it. I appreciate that. We can attack our credit scores more strategically rather than getting tied up in the negative emotions of it.”
Anthony said this perfectly. We get so scared about finances. We get this awful, pit-of-the-stomach, all-consuming feeling.
But if we are strategic and rational, rather than panicked and reactive, we get results.
Sixty points in the first three months! I can’t wait to see what happens to Anthony’s score in the next few months.
If you are feeling scared about your credit score, leave a comment below. Get your fears out of your mind. When you put the fear aside, you can start working on the solution.