Credit is such an important part of life that having a bad credit score can be quite overwhelming at times. You might ask yourself ‘Will I ever get a loan, sign a lease, and get a credit card? On the bright side, I have found that bettering your credit is not a quick process and requires a lot of patience and hard work but there are ways that one can improve their credit score. Here are the most effective ways that you should consider when you need to boost your credit score quickly:
Check Your Credit Report
The first one is making sure one has a copy of his/her credit report to ensure that he/she is aware of whatever status is currently on the report. To get your free annual credit reports go to annualcreditreport.com to get credit reports from Experian, Equifax, and Transunion. Go through your reports line by line and challenge any misleading, old, or half-baked information with the respective credit bureaus as explained in the next step. It has been observed that errors are corrected in the score if the student attempts.
Pay Down Revolving Balances
The second is the ability to manage credit cards, and the most crucial aspect in this case is the credit utilization ratio. This measures the extent to which you are utilizing your available credit and it is computed by dividing your current balance by the total amount of credit you have available. Credit utilization is a factor where, in general, the lower the ratio of credit used to credit limits, the better the score. To reduce the ratios, pay off the balances to any revolving credit accounts, such as credit cards. Little can build up, meaning even if a little is paid off at a time, that will also count. It can hardly be missed that as average utilization decreases monthly, the scores will increase as well.
Become an Authorized User
This is because it will show that another credit card has been active and in good standing for an extended period; thus, you are likely to be recommended for credit cards by banks and other credit card providers. Unauthorized use will be reflected on your credit report as a card activity even though you cannot be held liable for the account. It is also equally important that the card from which you are added has a good payment history and less utilization to benefit from your credit score, in case your credit history is not very impressive.
Apply for Secured Credit
If you do not have any active credit account that reflects on your credit report at the moment get a secured credit card. Secured cards work like regular credit cards where the credit limit is determined by a security deposit made at the time of obtaining the card, typically in the form of money. It can then be used as an ordinary credit card and the same transaction is sent to the three credit bureaus each month. They show that the person can handle credit and pay bills monthly when they use a secured card appropriately.
Limit New Credit Applications
It might be very tempting to open numerous new credit accounts that would expand your available credit. However, each gets flagged as a hard inquiry on your report and will pull down your score in the process. Do not make the mistake of applying for too many credit cards, loans, or lines of credit within a short period. Do not apply for one or more new accounts for at least 6 months while focusing on how to handle the accounts that you hold. Failure to pay your bills on time coupled with too many hard inquiries and new accounts will reduce your score.
Address Collection Accounts
If you have any opened accounts that you have turned over to a collection agency, you should contact the agencies to negotiate to pay the past due balances and have the collections removed from your credit reports. It is not advisable to pay off collections to gain an increased score instantly; however, having the collection off your credit record is a good way of increasing your score. Ensure that any amounts paid to collection agencies are in writing before making the payments because the agencies usually promise the pay and delete options.
Dispute Inaccurate Information
In addition to such errors, you also have to dispute that were not paid off, especially if they are negative items in your contact information or account statuses. Some of the common complaints include wrong late payments which are reported by mistake, wrong account status where accounts that are closed are reported as open, wrong reports of debts that one never owed, or wrongly reported terms of the loans offered. When you dispute errors, not only can you get these errors successfully deleted but according to the law, the credit bureaus are bound to investigate your claim. Litigating for trivial issues or without support is counterproductive, so challenge only the items that have clear evidence that are misleading or untruthful.
Monitor Progress
Paying for credit reports is not necessary since there are plenty of free sites like Experian and Credit Karma where you can monitor your credit. Supervising allows you to track your progress as credit is being rebuilt and to be aware of account activity, for instance, credit or debit of amounts without your consent. It may help to monitor progress from one month to another to stay encouraged and committed to making more timely payments, reducing balances, and disputing incorrect information. In a careful 6 to 12 months period, responsible credit management is going to show in rising scores.
When trying to increase your credit score as fast as possible there are some key points to consider: make all your payments on time, especially the minimum payments, don’t have your credit card limits exceeded, apply for new credit rarely and, if you find something wrong, do not hesitate to act upon it. I have to say that if you are persistent and do not give up easily you can take the matter into your own hands and watch as your credit score improves with time. It will take some time to show lenders that you are worthy of credit; doing the right thing all the time will be your testament.
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