A couple of years ago, Sandra was getting ready to apply for an auto loan in the hopes of buying a more reliable vehicle than her old one. With a friend’s urging, Sandra checked her credit score for the first time in her life. She knew she had always been relatively responsible with money, although she had run into some problems paying bills on time in the past. She only has one credit card with a balance of around $5,000—which she was making minimum payments towards.
When Sandra found out her credit score was only 578, she knew that getting any loan would be tough. The only auto lenders who offered her credit did so at high rates, with loan terms that could quickly get her into more trouble.
Instead of applying for those loans, Sandra decided to focus on raising her credit score—and it turned out to be a good idea. With the right tools, effective planning and hard work, Sandra’s score rose to 774 and she now has a new car with an auto loan that works for her. If you’re ready to boost your score, keep reading and we’ll show you how Sandra’s success can be yours too.
Quick ways to boost your credit score
Sandra’s financial picture was unique, and so is yours. So, how long it takes to improve your credit score will depend on the complexity of your situation. However, these are some tried-and-true ways of raising your score quickly:
Paying off debt
The more debt you hold, the higher your credit utilization will be. Lenders usually don’t like to issue loans to people with high credit utilization because that means they are using most or all of their credit limit, adding more risk and lowering the likelihood of paying everyone back. In Sandra’s case, she only had one credit card listed on her credit report. The card’s credit limit of $8,000 meant that Sandra was using almost all of her credit with her current $5,000 balance. Paying off as much of that as possible early on helped Sandra boost her score by freeing up the amount of credit she has available.
Becoming a user on someone else’s account
While Sandra was working on her credit, she married her long-time boyfriend who happened to have a healthy credit score of 750. He authorized her as a user on his credit card account, which instantly increased her credit limit and decreased her utilization. Plus, since he had held his card for almost 15 years, she got the added bonus of having an extended credit history on her report.
Getting a secured credit card
Sandra didn’t want to keep adding to her existing credit card balance, but she wasn’t sure how she would go about paying for online shopping or other expenses with just cash. Instead, she opened a Green Dot® Platinum Visa® Secured Credit Card and put down a $1,000 refundable security deposit (which set her credit limit) and made sure she paid her balance off every time she used the card. Best of all, Sandra was able to check to see if she prequalified for the card before applying, which meant her credit score didn’t take a hit and her regular payment activity would still be reported to the three major bureaus. (Check out Green Dot’s simple fees before applying.)
Alternative ways to boost your credit score
Sandra did an excellent job of addressing the balances she held and her payment activity. However, she also had to address some bigger-picture items, such as having a variety of loan types that would take her score in the right direction. These methods may take a little bit longer, but they’ll pay off in the long run and help you start seeing improvements with your score:
Taking out a short-term loan
One of the problems that initially contributed to Sandra’s lower score was that she only had one type of credit listed on her account: her credit card. Luckily, a smart friend suggested she look into personal loans, which can be taken out for a short period and used for everything from a home renovation to paying off bills. After some research, Sandra decided to take out a personal loan of $3,000, which she immediately put towards her credit card balance. With a lowered balance, her new lower payments made it possible for Sandra to split payments between her new loan and her remaining card balance—plus, she now has a new credit type on her report.
Stop closing accounts
Sandra’s current card wasn’t the only one she ever owned. Years ago, she opened a couple credit cards at some of her favorite stores and closed them thinking they were useless (since they weren’t being used). Unfortunately, Sandra’s credit score took a hit after the cards were closed because closing the cards had actually lowered her overall credit limit, increased her credit utilization, and knocked out some of her credit history.
Sandra focused on raising her score and, with responsible use, was able to do so in a relatively short period of time. With the right tools and resources, you can follow in Sandra’s path. Apply to get your very own Green Dot Platinum Visa Secured Credit Card today and start working towards good credit with responsible use and these helpful tips. Don’t forget to check out Green Dot’s simple fees here.