Credit score

Liz Weston: Is it possible to increase my credit score by 100 points in one year?

Dear Liz: I am 36 years old with a credit score of 535 and about to return to the United States from Colombia with my future wife. I would like to increase my score by 100 or 200 points within eight to 12 months. It’s possible?

Responnse: Raising your credit scores to the mid-600s in about a year is probably a reasonable goal.

Most consumer credit scores are between 300 and 850. The higher your scores, the easier it will be to get approved for loans and credit cards, and you will be offered better rates and terms.

What is considered a good or bad score depends on the lender and the scoring formula. In general, scores below about 630 are considered bad, while scores in the mid-600s are generally considered “fair”. Good scores usually start around 690.

Consider a credit builder loan from a credit union or online lender. The money you borrow is placed in a certificate of deposit or savings account that you can claim after making 12 one-time payments. You will pay interest to the lender, but at the same time you will be building up savings.

Secured credit cards are another way to build credit. You deposit a certain amount with the issuing bank, often $200 to $2,000, and get a line of credit for the same amount. If you use the charge lightly and repay it in full each month, you can build up credit without paying interest.

Dear Liz: You recently answered a question about whether to take a lump sum or annuity from a pension. I think you need to be more careful before making a blanket statement that payment is the only viable option. There are other reasons for taking the capital, such as the stability of the pension fund. My mother’s friend lost her entire pension when Bethlehem Steel went bankrupt. Also, I like the idea of ​​being able to access the package in case of catastrophic need (call me a control freak!).

Responnse: You can certainly access more of your money with a lump sum, but that’s a double-edged sword. You could withdraw too much money too quickly and run out of money. You could lose money through bad markets, bad investments, bad decisions and fraud. Even if you make good financial decisions now, that may not always be the case, as our cognitive abilities tend to decline with age.

However, the column you refer to does not say that an annuity is the only viable option. In this particular case, the annuity option came with health insurance for retirees, while the lump sum payment option did not. It would be quite difficult to exceed the lifetime guaranteed income plus medical benefits, but that doesn’t mean it’s impossible.

A lump sum might be a better option if the pension is particularly generous and the pension fund is not solvent. Your mother’s friend’s pension, for example, was covered by the Pension Benefit Guaranty Corp., so she didn’t lose everything when Bethlehem Steel went bankrupt. The workers lost part of what they were promised because their pensions exceeded the amount covered by the PBGC.

Liz Weston, Certified Financial Planner, is a personal finance columnist for Nerd Wallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.