It is possible to raise your credit score from the very poor 500 to a good 700 score within a considerable amount of time, provided that one is very determined and consistent in practicing good financial behaviors.
Here are the main steps you need to take:
Check Your Credit Reports
The first step involves accessing your credit reports through AnnualCreditReport.com and reviewing them to identify discrepancies. There are a lot of things that can hurt your score and even small mistakes can result in adverse effects; thus you should report any erroneous information to the credit bureaus. This can work wonders and give your score a much-needed lift at the onset of the game.
Pay Down Balances
The most important of such factors is credit utilization – the portion of the overall available credit limit used by you. It is best to keep this at a percentage of less than 30%. This is because credit utilization, which is the ratio of credit card balances and loans to credit limits, has a direct impact on credit scores. It is great to try and have all balances under 10% of the credit limit as much as possible to improve your score.
Warn All Bills Should Be Paid On Time
One more important component is payment history which contributes to 35% of FICO score, and it depends on prompt payments for credit cards and other debts. If you wish to automate your payment process, it is possible to enroll in autopay via the participating bank or lender’s website or by creating personal calendar alerts to receive timely reminders when payments are due. If you have any payment that is greater than 30 days past due, first bring those payments current and then strive to remain on time with all your payments.
Limit New Credit Applications
It reduces your credit score when you apply for credit and when you open a new account especially if you are a bad credit holder. It is recommended that one should not apply for any new credit after having been approved for a credit repair for at least six months to one year. Please remember that making multiple requests for an auto or home loan within a short time is considered as a single check.
Become an Authorized User
You can approach a close relative or friend with a well-maintained credit history and request that s/he include you on his/her credit card account. This can also help to increase your credit history coming from that account. Ensure that is an old account, preferably with consistent and prompt payments. The account ‘PayPal’ should be checked to make sure it is still processing positive payments after the addition of the Account Holder.
However, to ensure that you do not fall back into your old habits of accruing debt, you should be wise in the usage of secured credit cards.
Secured cards work like ordinary credit cards but a cash deposit is needed and it is both the spending limit and security to the lender. They are relatively more accessible to get than cash-back credit cards and ensure that they give credit score updates to the main credit bureaus. Make the least use of the card, but ensure that you pay your credit line on time. After half to one year, you should be eligible for an upgrade to a standard, no-security unsecured card, and you will get back your deposit.
Monitor Your Score Monthly
Go online to get free credit monitoring services to check your score now and then. Therefore, both Experian and Credit Karma offer an overview of the credit report and score for free. Tracking means one can see the changes being made over some time which instigate the person to keep on striving to better their credit score through proper handling of money.
Be Patient But Persistent
Boosting your credit score by 100 points is not a walk in the park, it requires hard work and patience. Stay on track with your financial habits and continue to manage your credit responsibly. It is possible to note that in 6-12 months, the volume of recovery is rather significant. By passing the test for 2-3 years, a borrower can achieve higher 700 credit scores to qualify for the best interest rates in future loans. It is important to note that it may take some time for this process to yield results; therefore, do not be discouraged if little progress is evident at first – it is going to take some time if one wants to see a drastic increase in the credit score.
If you follow the given steps to a T while being determined to improve credit responsibility, achieving a score of 700 and above is well possible. Make sure you track your conditions, adapt to what affects your personal credit and credit report, and keep on with good practice. Hello, here is your chance to avail a far better credit score and financial standing!
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