With a credit score of 500, you will have extremely limited possibilities of getting authorized for all kinds of loans, credit cards, mortgages, and sometimes renting a property. Nevertheless, one may significantly raise their credit score going forward by making wise credit choices and saving time and effort to implement them. This tutorial will help you to raise your credit score from 500 to 700 so that you may have a good credit score.
Get Your Credit Reports
The first procedure is to obtain personal credit reports from the three credit reporting agencies, which include TransUnion, Equifax, and Experian. Make sure you check the reports and challenge any information that you may find misleading, unsupported, or stale. It can help to gain an increase in your scores immediately once the errors are eradicated. You can download a copy of your reports for free once a year at the websites of annualcreditreport.com.
Pay Down Balances
If you have revolving credit in the form of credit cards or loans, you should try to pay down the balances as soon as you can. This one is calculated as the total of balances divided by the total amount of credit available to you and naturally contributes quite significantly to your scores. It's advisable to ensure that this is below 30%, the much lower, the better. Reducing balances is as simple as paying them off, and this can almost instantly boost scores.
Pay Everything On Time
Credit payment history is another factor and one of the most important when determining credit scores. From this point, there should be a conscious effort to ensure that all bills are paid as when they are due. Even though delinquent payments can be removed from credit reports after seven years, the effect they have on credit scores remains till this time.
Become an Authorized User
If you know anyone with good credit standing who is willing to assist, try to ask for the account number of their oldest credit card so you can be included as an authorized user. This will help you to get a good record that is reported on your file but does not impact the other individual’s credit. But be careful when using this strategy, for you will also receive the risk of the account in addition to the benefit.
Get a Secured Credit Card
If your credit scores are low, it is possible that you may not be approved for any major credit card. However, get a secured one since it is designed specifically for people who have a poor credit rating. A secured card requires you to pay a cash amount you want to use as your credit before you can be issued the card. A secured card is helpful since it will assist in rebuilding the credit scores given that one will ensure the balance is low and that the payment is made on time every month. You can get an unsecured card with improved conditions after one year to 1.5 years of on-time payments.
Approach for Credit Builder loan
Credit builder loans are meant to enable you to borrow a small amount of money and pay it back on time to show that you are a responsible borrower and improve your credit score. just like a secured credit card is meant to help you do. Usually deposited in an account until the loan is repaid, it is handed to the borrower. For this reason, they might be a bit more expensive than standard loans; yet, when used for credit restoration, they can be well worth it.
Optimize Credit Applications
New credit means a ‘hard credit check’, which is conducted each time you apply for credit and brings the score down slightly for some time. To avoid such an occurrence, what is advisable is to group the applications in a way that they are as close as possible in time so that the inquiries form a single event. However, also direct your applications to credit unions and community banks since these are more likely to compromise on credit scores.
Watch Account Use Closely
Do not close accounts even if you seldom use the associated credit card or have not transacted using the account for a while because a longer credit history is beneficial. A Netflix subscription or $5 fill-up charge on unused cards that accrue small monthly charges and so on should be on the card and then set to pay off the total amount every month. The two, activity and perfect payment history, will gradually raise your scores while on the program.
Make it a habit to log into the portal often, so you can check your scores and other reports frequently.
There are several credit reporting agencies whose services are free, feel free to subscribe to their credit monitoring services so you can monitor your scores and reports frequently. This is because catching such acts early helps reduce the effects it has on the business or industry in question. Monitoring also helps one to see how rebuilding affects the scores, which is encouraging as one tries to achieve the set 700 figure.
Be Patient
To raise a very low credit score of 200+ points will take time, effort, and money for the most part. There is also a requirement to keep up positive behaviors month after month, year after year, and to avoid introducing new negative or late payments. If the steps are followed strictly, then it should be possible to raise the credit from 500 to 700 within two years. Focus on this goal and let your newly obtained scores be the fruit of your efforts for the result.
Call now for expert credit repair services: (888) 803-7889
Read More:
How to get a 700-credit score in 2 months?
Is it worth having someone fix your credit?
Why did my credit score go from 524 to 0?
