Credit Scores — roll the dice or slay the wandering monsters

I used to think credit scores were like Dungeons & Dragons Conventions — only a complete AssCaptain would care about it. (FULL DISCLOSURE: I still have my fake leather sack o’ 20-sided dice). This was, of course, until the day I tried to buy my first house and discovered there was a court lien on my credit report. Yeah, not cool.

This little legal gremlin haunted me for nearly 10 years even though I tried a dozen times to get it removed and paid it 3 different times. But, this thing was like Kim Kardashian — it just wouldn’t go away. Just for background: this lien was the remnant of a small town speeding ticket for $27 where the cop pinched me for 7 mph over the limit. In my typical college fashion, I blew it off and opted into more “liquid” investments at the time.

What’s the lesson, my friends? Don’t blow shit off. I suspect this $27 gas pedal problem has cost me many thousands of dollars because of increased interest rates on every dumbass debt I’ve ever taken.

Credit scores are important. They are now becoming used for more than just lending inquiries. I’ve even heard of prospective mates conducting credit checks on each other! As over-the-top as that may sound, there’s a solid chance I’ll be pulling credit checks on any future son-in-law coming down my driveway.

“Give me your social security number, AssCaptain. You better be above 700, and you better have her home by 10:00!”

If your credit score is lackluster (banking term for “shitty”), here are a few ideas for raising it 50 points pretty quickly:

1. Of course, pull the report and get the scores. This is how you’ll know what’s in there and who to harass. Now, I pay $12.95 per month to get the alerts and updates from Experian through my bank. Many banks have discount agreements through the reporting agencies, so go there first. This may be a bit of overkill, but I think it’s worth it for my short term goals. I want to be on top of it.

2. The report will contain information regarding inquiries and any potentially damaging information. If there is anything in there to dispute, don’t be afraid to make a call immediately (tip: try gethuman.com to speed up the process). I ended up with my Senator’s office to get my $27 tax lien removed. Yes, it was that difficult. Don’t give up.

3. Pay your revolving debt weekly. I’ll go into budgeting in much greater detail later, but I believe this is one of the more powerful tactics because of the compounding cycle. Consider the fact that there are 52 weeks in a year instead of the more intuitive 4 weeks x 12 months = 48. That’s an extra MONTH of payment per year if you’re paying weekly. Not only does this make you impenetrable to being late, but if you do nothing else but just round up your payment, you’ll be paying slightly more by default.

Example: if you’ve got a credit card you’re trying to make dead with a $227 minimum payment, don’t just pay once per month. If you make a $57 (instead of $56.75) weekly payment, you will end up paying $2,964 per year instead of the mandatory $2,724 with virtually no perceived difference in your cashflow. Like I said, stay tuned, subscribe, and wait. I’m dedicating a whole page to budgeting for weekly cashflow using an accelerator to put your wealth building in overdrive.

4. Prioritize your financial goals then form a strategy. If buying a condo within the next 6 months is coming, then you’ll definitely want to start reviewing your documents and credit report. If you’ve got something maxed out, it will likely hit hard on the report. If your goal is to raise your score more than get all your debt paid, then you may want to distribute the payments to get the balance below the 90% limit. Just remember: finance and proper use of leverege is a symphony. One element affects the other.

5. Cruise the credit report forums and blogs. There are whole sites dedicated to getting your credit score into the land of rockstars (Well, maybe not Axl Rose).

Credit Karma
Annualcreditreport.com
National Foundation for Credit Counseling

There are a ton of resources, but beware of anybody selling a service that magically fixes your credit. As far as I can tell, there isn’t anything magical about the process of hauling yourself off the shitpile. It’s a long, arduous task that usually feels like a financial flogging depending on how horrible you’ve sucked in the past. Think of it as therapy.

By forming a strategy, I pulled my Kraptacular Kredit Skore from around 625 to 735 in about 5 months.  It was actually easier than I thought, but mostly just really annoying.

What am I missing?  Leave it in the comments… and hey, don’t forget to SUBSCRIBE.

About the Author: Patrick

My goals in life are to not have a job and to work my ass off. I give your choice of virtual high five, cyber hug, or electronic fist bump for meaningful interaction.