Dear Liz: I am 36 years old with a credit score of 535 and am about to return from Colombia to the United States with my future wife. I would like to increase my score by 100 or 200 points within eight to twelve months. It’s possible?
Responnse: Raising your credit scores in 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 benefit from better rates and terms.
What is considered a good or a bad score depends on the lender and the scoring formula. In general, scores below about 630 are considered bad, while scores in the middle of 600 are generally considered “fair”. Good scores usually start around 690.
Consider a credit loan from a credit union or online lender. The money you borrow goes into a certificate of deposit or savings account that you can claim after making 12 payments on time. You will pay interest to the lender while building up your savings.
Another way to build credit is secured credit cards. 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 fees lightly and pay them off in full each month, you can build up a loan without paying interest.
Dear Liz: You recently answered a question about whether to withdraw a lump sum or an annuity from a pension. I think you need to be more careful before making a general statement that payment is the only viable option. There are other reasons for taking the package, 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 it’s a double-edged sword. You could withdraw too much money too quickly and run out of money. You could lose money because of bad markets, bad investments, bad decisions and fraud. Even if you make good financial decisions now, this might not always be the case, as our cognitive abilities tend to decline with age.
However, the column you are referring to does not say that an annuity is the only viable option. In this particular case, the annuity option came with retiree health insurance, unlike the lump sum option. It would be quite difficult to exceed Guaranteed Lifetime 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 Pension Benefit Guaranty Corp., so she didn’t lose everything when Bethlehem Steel went bankrupt. Workers lost some of what they had been promised because their pensions exceeded the amount covered by the PBGC.
Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet. Questions can be directed to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.