Dear Liz: I am 36 years old with a credit score of 535 and about to return to the US from Colombia with my future wife. I would like to increase my score by 100 or 200 points in eight to 12 months. Is it possible?
Answer: Increasing your credit score to the mid-600s within a year or so would likely be a reasonable goal.
Most consumer credit scores fall in the range of 300 to 850. The higher your score, the easier it will be to get approved for loans and credit cards, as well as the better rates and terms you will get.
What counts as a good or bad score depends on the lender and the scoring format. In general, scores under 630 or so are considered bad while scores in the mid-60s are considered “fair”. Good grades usually start around 690.
Consider a credit building loan from a credit union or online lender. The money you borrow is put into a certificate of deposit or savings account for you to claim after you’ve made 12 payments on time. You’ll pay interest to the lender but build your savings at the same time.
Secured credit cards are another way to build credit. You deposit a certain amount in the issuing bank, often between $200 and $2,000, and you get a credit line of the same amount. If you use the fees lightly and pay them 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 an annual payout from your pension. I think you need to be more careful about making a blanket statement about yield being the only viable option. There are other reasons for taking the lump sum, such as the stability of a retirement fund. My mother’s friend lost her entire pension when Bethlehem Steel went bankrupt. Also, I like the idea of being able to hit the lump sum in the event of a catastrophic need (call me a control freak!).
Answer: You can certainly access more of your money in a lump sum, but that’s a double-edged sword. You can withdraw a lot very quickly and run out of money. You can lose money in bad markets, bad investments, bad decisions and fraud. Even if you are making good financial decisions now, this may not always be the case because our cognitive abilities tend to deteriorate with age.
However, the column you’re referring to doesn’t say an annuity is the only viable option. In this particular case, the premium option came with health insurance for retirees while the lump sum option did not. It would be very difficult to get the highest guaranteed lifetime income as well as medical benefits, but that does not mean that it is impossible.
The lump sum may be a better option if the pension is particularly generous and the pension fund is not able to meet it. Your mother’s friend’s pension, for example, is covered by Pension Benefit Guaranty Corp. , so you didn’t lose everything when Bethlehem Steel fell. Workers there lost part of what they had been promised because their pensions were greater than the amount covered by the People’s Bank of Palestine.
Liz Weston, Certified Financial Planner, Personal Finance Columnist at Nerdwallet. Questions can be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or using the “Contact” form at asklizweston.com.