When I was a young man, I fancied myself as something of a traveler.
I met my wife (a New Yorker) on a beach in Pohang, South Korea.
The nearby steel factory made the waters toxic and unswimmable… but it was a nice spot for romantic sunset walks.
From there, we traveled throughout Southeast Asia… and Europe… and eventually settled in Ireland for a few years.
Life was good. But we had to come home at some point. And when we did…
Our credit was a raging dumpster fire.
Think of the worst credit score you’ve ever seen… now subtract 50 points from it… that was our credit score.
The worst part was we had pretty good credit scores before we left. And we thought they’d be waiting for us when we got back.
But years of inaction had worn them down to nothing.
Here we were, a young couple trying to start our life.
We couldn’t buy a car. Couldn’t get a loan.
Just to get an apartment we had to put down three months’ rent as a deposit, taking a monster bite out of our savings.
(Technically the money was still ours but it was illiquid. We couldn’t invest it, buy furniture with it or, most importantly, access it in the event of a financial emergency.)
We slept on a mattress on the floor. Swallowed an almost two-hour commute to work.
But we’ve been able to claw back to great scores using a few key strategies… and you can use them to boost your credit score too.
1. Be Your Own Lender
One of the easiest ways to demonstrate your reliability as a borrower and build credit fast is with a credit card.
Use it to buy what you can afford. Pay it back at the end of the month. Your credit goes up.
But when your credit sucks, like ours did, nobody’s going to give you jack.
In fact, if you’ve got bum credit, and someone is eager to give you a credit card, that’s a big red flag. These things are designed to trap you in a predatory cycle of spending too much and high interest repayments — essentially a scam.
What you need is a secured credit card.
Think of a secured card like a low-limit credit card — except you provide the credit line.
When you’re approved for a card, you’ll pay a deposit on the account — anywhere between $50 to $2,000. This deposit acts as the credit line for your card.
So, if you put $200 in the account, your card will have a spending limit.
Secured cards are handy for buying stuff online and other purchases that require a credit card. But more importantly, they are great for building credit.
The secured credit card was a lifesaver when we made it back stateside.
2. Get Credit for Things You’re Already Doing
One of the frustrating things about building credit is that not paying your bills on time will negatively affect your score…
But no one will give you any credit for responsibly paying your bills on time…
Unless you ask them to.
If you pay your utilities, rent and insurance on time, you can send a Letter of Stability to the three credit bureaus.
This is a legal document that asks your credit bureaus to add your history of on-time payments to your credit report — recognizing your responsible spending and boosting your credit score.
Simply Google “letter to request addition of information showing stability template”, fill it out, and send it to the credit bureaus along with copies of your bills.
Obviously this only works if you’re actually paying your bills on time. But if you’re serious about rebuilding your credit, you should be doing this anyway.
3. Take it to the Next Level
After about a year, and using the above tactics, my wife and I had credit scores around 650.
Not a great score… but a far cry from the raging-dumpster-fire days.
At this point we were able to give up our secured credit cards and get a couple of regular unsecured credit cards.
You won’t have the best choices right away. You’ll probably be looking at higher annual fees and higher interest rates.
But if you pay your balance every month, your credit will grow and you’ll get access to better and better cards. Pretty soon, you’ll be able to match scores with the best of them.
All the best,
Editor, Money & Crisis
P.S. It’s easier to max out your credit score with a steady disposable income like James Altucher’s powerful income-building strategy. This simple technique can be used to yank $3,000 out of the stock market every month. Click here and he’ll show you how to do it yourself. Don’t delay. You only have until midnight Sunday to take him up on his offer.