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Hi Taylor
- I recently read about apps that can help fix your credit score.
I'm wondering if this is another scam or if it's worth looking into.
Hi Meredith - I was just researching a few of these apps myself
for a new client. From what I can tell, these programs aren't meant
to scam you. The effectiveness might be questionable, but I don't
think you have to worry about getting tricked or robbed.
Before you download a bunch of credit-fixing apps, you need to take
stock of your financial picture and what really needs fixing. I talk
with a lot of people who are like, "Man, I need to get my credit score
up so I can get a loan with a good rate." And my response is, "No,
you need to deal with all those thousands of dollars of debt before
you can borrow more."
Depending on the state of your finances, some apps/credit-fixing efforts
will make more sense than others. No matter what, don't think that
a good credit score is more important than paying off your credit
cards and outstanding loans.
If you're in a place where you have cash in the bank but need to get
that FICO score back up because of a bad loan or a foreclosure in
the past, something like SeedFi might help. This app uses Credit Builder
Prime and essentially opens a savings account on your behalf. You
have to commit to putting money into your SeedFi account every pay
period, and the money you save is reported as a bill payment. Without
actually spending money, SeedFi reports to the credit bureaus that
you've made an on-time payment. Each pay period, your credit score
will get a little nudge.
SeedFi stands out to me because it focuses on saving instead of spending
(Credit Builder Prime is also free). Other apps help your credit in
the more traditional way: they provide a small loan, you spend that
money and pay it back, that info gets reported to the credit bureaus
and your score improves. It's the same thing that happens with timely
payments to a credit card; the main difference is that other lenders
are pickier about approval and might charge high interest and other
fees because of a bad credit score. The main advantage offered by
a lot of these apps, like Sable and Credit Sesame, is that you can
get a secured card with a small balance and fewer strings attached.
Every point matters when it comes to your credit score. There are
no instant solutions, but these credit apps can definitely give you
a boost. I hope you find one that works, Meredith! |
| Legal Disclaimer:
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
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