A three-for-one, by 720 Credit Score
The best thing a person can do to increase his or her credit score?
Reduce credit card debt.
Aside from your past payment history, which you can’t do anything about anyway, outstanding debt is the top factor in determining your credit score. The lower your balance (as a percentage of your limit), the higher your score.
Another thing that is great for your credit score is having an active or paid installment loan on your credit report.
So how can you accomplish both of these goals in one fell swoop?
Visit your local credit union and ask for a debt consolidation loan. Then use this loan to pay off your credit cards. If you are lucky, the interest rate on your debt consolidation loan will be lower than the interest rate you pay on your credit cards.
And there you have it: lower credit card balances, an installment loan on your credit report, and lower interest payments!
Of course, for this strategy to work, you must keep a low limit on your credit cards (though you should be sure to keep them active), and you must pay your debt consolidation loan on time.
At first, your score might drop a little bit. Adding a new loan to your credit report could hurt your score a bit.
But as soon as your credit cards report your new balance, your score will start to jump.
And once you’ve made about six months of timely payments on the debt consolidation loan, your score will climb even higher.
Have any questions on this strategy? Leave them in the comments section below!
Philip Tirone
