In 2005, anyone with a decent credit score (640+) could get a personal loan from the major banks with little ease.

Fast forward to today, and personal loans are about as common as Kanye West NOT making a complete fool of himself every time he’s on stage. Credit is tight, and just having a good credit score isn’t enough to land a low interest rate personal loan anymore.

3 places you can still get a personal loan

1. Lending Club – This one is a no brainer if you have a high credit score, and a clean credit file. And a job. You need to be cream of the crop to get a great interest rate at Lending Club, but if you are, you can get a rate as low as 7.89% for up to $25,000. A 660+ FICO score is the bare minimum.

2. CitiFinancial – Again, you’ll need stellar credit, and probably be a homeowner to get approved at CitiFinancial. The rate isn’t going to be great, but if you own and home and have good credit, you may be able to get approved at CitiFinancial. The max loan amount is $15,000.

3. Virgin Money ala The Bank of Mom & Dad – Getting a personal loan from your parents may get you a great rate (0% potentially!), but at what cost? Mixing family and money can be a disaster for many relationships. Be very careful when getting a loan from your family. Get everything in writing. I would suggest using Virgin Money to manage the paperwork and payment processing.

Personal loans can be used for anything

The nice thing about personal loans is that you can use the proceeds for just about anything. The most common use is paying off debt, but you could use a personal loan to start or expand a business.

One note: Be absolutely sure you are getting a loan for the right reasons. If you are going to payoff your debt, then cut up your credit cards after you receive your loan money. I’ve heard too many stories of people vowing to consolidate their debt, only to rack up more with their newfound credit lines.

What does your credit score do for you anyway?

The long and short of it is that a good credit score allows you to get cheaper interest rates on all types of loans and credit cards. Voila! That’s all it does.  Lenders see you as more trustworthy and reliable the higher your score is. At this point you should have figured out where I am going. Why would someone who is trying to pay off all the money they have borrowed be worried about looking more attractive to lenders so they can borrow more? It doesn’t make any sense. A higher credit score could also qualify you for a higher credit limit (although that’s not fixed in stone) but once again, why are you looking to have more money available to owe?

Why worrying about your credit score can hurt your current debt progress

Do you know how your credit score is calculated? I’m sure most of you do but for those that don’t the three top dogs (equifax, experian and transunion) use information sent to them by lenders and plug some numbers in different formulars and come up with your score. The thing is, what you need to do to get a higher score might not always be in your best interest. For example, opening a lot of new cards in a short period of time will lower your score but for a person who has really high interest rates on their current cards (and the lender refuses to drop it) it might make more sense to open 1 or 2 new cards and transfer the balances.   On the flip side, having a larger credit line will increase your score because your debt utilization will drop. For someone who might have a problem controlling their spending, does it make sense to give your self more rope to hang yourself? Just because a lender will give you more credit does not mean you should always take it. It’s better to make decisions thinking about what makes better financial sense than worry about how it will affect your credit score.

Caveat

Like I said earlier, the one time your credit score matters is when you are trying to buy a house. Contrary to popular belief, your credit score is not so important when renting. I have moved around a lot and all landlords are mostly interested in is whether or not you have been late in making payments (in 7yrs and 10 months I have never been late but my credit score is about 695 b/c I have large balances) not what your actual score is. On the other hand, mortgage lenders are VERY interested in your score. The life of a mortgage is much longer and they want to make sure you are able to pay. For this exact reason, the interest rate you get is very important. The amount of interest you pay and your monthly payments vary dramatically per percentage points. As much as Dave Ramsey would love it, I don’t think many of us will be paying cold hard cash for our homes so this is an important point.

I just checked my credit scores.

689 @ equifax

695 @ experian

693 @ transunion.

I used to be in the 740’s. It dropped because bank of America slashed the limit on 2 of my cards and closed my line of credit. If I saw this last year, I would have been upset. Now, I don’t really care. I only checked to make sure my credit history was correct. That’s so much more important than any number they throw at me.

Not bad. Not bad at all. Steady climbs across the board. My previous scores in Jan. this year were 518 for TransUnion and 610 for Equifax. In February they were 548 for TransUnion and 634 for Equifax.

How Else To Improve My FICO Scores?

I only have two credit cards currently, and both have pitiful credit limits of $300 and $500. I don’t use the cards ever, but they are both reporting (I had the annual fees to pay off initially), which is good.

I’m thinking with that 644 Equifax score I could probably get approved for some other cards.

Now, don’t worry, I have no plans on actually using any new credit, I’d be solely getting them to increase my available credit which can significantly increase your credit score.

Store Credit Cards

I might try a store card like Best Buy or Nordstroms….or maybe go talk to my bank.

Anyway, good news on the credit score project front. Having a score above 700 will be significantly helpful should I ever be able to purchase a home again.

Of course, I really just want to pay cash for everything. Yeah….cash.

My Experian credit score.

After today, Feb. 13th, FRIDAY the 13th mind you, consumers will no longer be able to access their Experian FICO score.

It’s really a shame. Lenders and commercial businesses will still be able to access the scores, but not consumers through myfico. Lame. Lame. Lame.

I understand Experian wants to establish their own “FICO” brand…..the “vantage score”. But really Experian?

I updated my own scores at MyFico today. Made some decent progress across the board actually. My two bad credit credit-cards are reporting now which I think is starting to help my scores. It will be a while, maybe never before I hit the 700’s again, but I’m gonna keep trying. As I’ve said before, I like numbers going up in my life (subscribers, bank accounts, fico scores!).

It was nice knowing ya Experian.

My Current Credit Scores

To hit that goal, I need to have much better credit scores. I pulled my 3 scores from MyFico yesterday and the results aren’t pretty.

TransUnion: 518

Experian: 578

Equifax: 610

Rebuilder Credit Cards

I got approved and received my first two credit cards since my bankruptcy about a month ago. I got my first statements this week, and so far everything looks good. The credit limits are terrible ($300 and $600), but hey, it’s a start.

Rebuilding my active credit and building more available credit will help raise my score back up to the 700’s where it used to be before I went and screwed it all up

Started with Lexington Law

I approached a company I’ve seen advertise all over the place, Lexington Law, to see if they would be willing to offer their services to me for free in exchange for me writing about my experience. Well, they agreed and I got signed up with them yesterday.

I called into their office over the phone, and the whole process took about 15 minutes total to get setup. I already knew pretty much how they work, so I didn’t have many questions. The two guys that helped me (Jake and someone else), were very friendly.

You can find out more about credit repair from Lexington Law’s website here.

A good credit score is important to me again

For future business ideas, for low auto loans, for buying a house…a good credit score is important. I used to think I’d always be a cash person from here on out. But I trust myself now to wisely use any credit I might get in the future. No more day trading, none of that crap.

Getting my credit back on track is just one part of a long journey here.

Well, I’m changing my mind. I want to try and rebuild my credit score up to where it used to be. Somehow, even with my bankruptcy and the foreclosure (and short sale), my credit score has creeped back up quite a bit this year. I checked my score at the end of November:

As you can see, my Equifax score isn’t actually terrible at all. It’s not stellar, but it’s not terrible. My Experian is pretty bad, but all in all, I’m way up from the scores I saw last year (I pulled one time and was in the 400 level). I think all my late payments are now well behind me in my file. Also, I have no personal debt, so my credit ratio is good there. I think my score would continue to creep upwards if I just continued to do nothing.

But, looking at some personal goals for myself in the next year or two, I would like to try and purchase a house again at some point. I don’t believe that can happen for at least two years after bankruptcy, but that is only a year away at this point.

First Credit Cards After Bankruptcy

After I checked my above score, I did some research on rebuilder type credit cards. Just a personal note on me getting credit cards again. I don’t worry about this at all. I will only be using these for credit score purchases. I will not be buying stuff I don’t need, or putting money into a day trading account like I used to years ago. I’ve learned my lessons there.

Anyway, I applied for about 6 cards all at once. I didn’t receive instant decisions, but none declined me right away either.

I received my first two cards in the mail today. The first, a tribute gold mastercard. The second from HSBC Household bank. Both with whopping $300 credit limits! Whopee! Both have annual fees (lamo), but that seems standard for these credit rebuilding type cards.

Anyway, I’ll try and come back once a month and update this thread with a new score or two as well as any other actions I’ve taken to rebuild my score!

So, what is defined as a "good" credit score? The answer isn’t as simple as you may imagine (or hope). In this article, we’ll describe how scores are derived, defined, and perceived by lenders, landlords, and other business entities.

How Is A Credit Score Determined?

The most commonly used credit scores are FICO scores. They are calculated based upon 5 criteria. Your history of payments, the amount you currently owe, the age of your credit history, new credit accounts, and other factors all have an affect. Some factors (such as your payment history) are weighted more heavily than others (i.e. how much new credit you have). In the end, your score will be between 300 and 850.

It is important to note that your score fluctuates whenever the above factors change. If you max out your credit cards, your credit score will decline. If you significantly lower your credit card balances, your score will rise (other factors remaining the same).

Do You Have A Good Credit Score?

Most consumers’ FICO credit scores are between 600 and 750. These numbers require some explanation. First, most lenders consider any score above 700 to reflect good financial management. Credit scores below 600 suggest that a person has had trouble paying their bills or managing their credit in the past. The higher your score is, the less risk the lender perceives in offering you a loan.

If your credit score is above 700, you will enjoy lower rates, more credit, and greater availability of financial opportunities. Below 700, the picture becomes less clear because some lenders will be more forgiving than others. For example, assume that your credit score is 660. It’s far from perfect, but it’s certainly not catastrophic. You might have high balances on a number of credit cards, and may have even missed a payment. A mortgage lender may be wary of offering you a competitive rate for a 30-year prime loan. But, your bank may be more forgiving if you want to purchase a car.

Improving Your Credit Score Over Time

You won’t be able to hide your credit score from lenders, landlords, and banks. The good news is that you can raise it over time. Remember, your FICO score moves up and down, reflecting changes in the factors I’ve described above. If you establish a history of timely bill payments while reducing the amount of consumer credit you’re carrying, your score will gradually creep up. With diligence, it can climb past the vaunted 700 mark.

Credit scores are not complicated. But, unless your score is approaching 800, relying on a number to reflect your creditworthiness can oversimplify the picture. The important thing is that your score is largely within your control.

CreditKarma gives a you a "score" that’s pulled from Transunion data. It’s not a real FICO score, but what would be known as a "fako score" among credit score snobs.

CreditKarma gave me a 633 FICO score!

Holy smokes, that was WAY higher than I was expecting. I mean, WAY higher.

The last time I checked my score (probably about a year ago, and before my bankruptcy), It was a 471 from experian. Ouch.

My Real Credit (FICO) Score

Curious, I decided to pull my score from MyFico and actually get a real, legit score (that I had to pay for, but did use a coupon).

The verdict?

610

Can you believe that? Dang.

What’s hurting my credit score

Here’s what is hurting my score according to my report:

• You have a public record or collection, as well as a serious delinquency on your credit report.
• You have multiple accounts showing missed payments or derogatory descriptions.
• The remaining balance on your non-mortgage installment loans is too high.
• You have a short credit history.

These all make sense based on what’s happened the last year. The bankruptcy shows up on the public record side of things.

Short Sale…Not Much Credit Score Hit

I think this shows some real evidence that doing a short sale won’t completely kill your credit score. I’d have to hear from others who have done one, but a 610 after a bankruptcy, tons of late payments, and a short sale…I’m really surprised at this.

In the notes on my 2nd mortgage it says,

Account legally paid in full for less than the full balance

And on the first mortgage it says,

Paid account, foreclosure was started

I’m almost tempted to purchase my other two scores now to see if they are in line with this Experian score.

Late Payments…Yeah, I’ve got em

50 lates on my report. Ouch.

Props to MyFico

Props to MyFico (and creditkarma was pretty close actually!). I haven’t used their service for a long time, but I used to be quite the frequent customer. They’ve redesigned their whole layout of the score and report and it’s very easy to navigate. If you want to check your real score, make sure and use a MyFico Promotional Code.

You know you’re getting older when you start talking about mortgage rates and credit scores!

It was actually a pretty fun conversation for me. I didn’t input anything (I got 200K+ in credit from age 21-23…I think I know a little about credit scores!), but just listening was amazing.

Hardly anyone my age has any clue what their credit score does, how it’s calculated, or what it affects. I was amazed. My friends are all college graduates, some with master degrees. Yet, very few even know, let alone understand their credit score.

Now, I won’t even get into Business credit scores, because that’s a whole other ball game (that most small businesses don’t know about either). But personal credit scores….come on guys. Let’s play a game….the friend with the lowest score wins…

I win!

Seriously though. Should I even bother caring about my score at this point? The last time I checked it, it was 471. And that’s before I had filed for bankruptcy. I wonder how much more it can drop…

For the normal post-college grad my age, it’s 3 digits that really matter. For me right now…I think it’s one of the last things I need to worry about. Someday, maybe someday I’ll want to look at my score again, but for now I think I’m OK being a credit score expert…with a terribly low score.

To get your credit score, use a promotional code for myfico.

I would consider myself somewhat of a credit score expert. What I did with my credit score (getting over 100K in credit at age 23) unfortunately didn’t turn out very well for me. That doesn’t mean that you can’t benefit from my mistakes though! Here are 3 free, fast, and easy steps you can take to increase your credit score.

Increase your credit limits

The first simple and fast tip to raising your credit score is by increasing your credit card limits. If your balance is $4900 on your $5000 limit card, your balance to credit ratio is nearly 100%. By raising your limit to say $8000, your score will jump because you now don’t look as stretched on your report. You have free credit available. For better or worse, the more available credit you have, the higher your score is going to be.

So, how do you increase your credit line? Simple. Call up your credit card company and ask. If you have been making your payments on time, your request will likely get approved. One item to note: make sure and ask the customer service rep if they will do a credit check (inquiry) to approve the increase in your credit limit. An inquiry can temporarily lower your credit score, the last thing you want! Press the issue with the rep to do the increase without an inquiry. If an inquiry cannot be avoided, make sure you are getting a significant increase in credit to justify the hit by the inquiry.

When talking with the credit card customer service rep, don’t be afraid to tell them you will take your business elsewhere. They don’t want to lose a customer. If you have a higher credit limit with another credit card, ask them to match or exceed that limit.

Apply for new credit

Initially applying for new credit will ding your score. But by adding available credit, you will lower your balance to credit limit ratio (the most important factor in your credit score). Make sure and apply for all your credit the same day.

—–>Here are my recommended credit cards to get high credit limits

This way you’ll be more likely to be approved for all your cards as the inquiries will not show up right away on your report.

Once you get your new credit cards, make sure to charge at least one item right away. That will get the cards reporting on your credit report, along with their available balances. Now, make sure not to rack up the debt on your new cards, otherwise your efforts to increase your score will go down the drain!

Reduce your outstanding balances

The fastest way to raise your credit score is by reducing your balance to credit ratio. For example, if you have a $5000 limit credit card, but owe $4900, that will kill your score. Reducing that balance down to 0 or even $1000, would likely cause a jump of 40+ points or more in your score.

So, how do you reduce your outstanding credit?

There are a few options. The first is pay down what you can. Debt sucks (I know). If you want a quick fix your best best is to refinance your outstanding credit card debt into an installment loan. The installment loan won’t count against you in terms of the dollar amount nearly as much as having that balance on a credit card.

Also, an installment loan will have a set period to pay off the loan, thus reducing your overall debt over time.

Knowing is half the battle

Without knowing where your current 3 credit scores are you’ll be negotiating in the dark. (you don’t have ONE credit score, you actually have 3. One from each of the major companies, Experian, Equifax, and TransUnion. You should know all 3) Make sure and get your current credit score from a reputable source, not those “free credit report” scam sites. The place I get all my scores from is MyFico, they have the best rates, and an easy to use website to access all three of your scores. Go to my MyFico Promotional Code page for codes to use when you check out for a discount.

What about an installment loan?

Tip #3 involves refinancing your current credit card debt into an installment loan. This is more difficult than it sounds. Going into a bank and asking for a personal loan to pay off your credit card debt isn’t always easy (unless you have equity in your home and want to go that route).

I’d try a peer-to-peer loan from a site like Lending Club. You’ll get a much lower interest rate than from a traditional bank. Not a bad way to start. Lending Club only accepts borrowers with a 660 FICO (credit score) or higher. So make sure and get your scores first before you apply.

Delete bad entries from your credit report (legally!)

If you’re credit has some issues, and you want results a little faster, you might check out a credit repair service like Lexington Law. It’s not going to be free, but I’ve seen results that are pretty amazing.