While there’s no quick and easy fix for a bad credit score, you can certainly start taking steps immediately to get you on the right track. It’s important to remember that discipline and responsibility are your best bets for a good credit score – don’t hold out hope for a magic fix or you’ll soon find it’s too late to repair the damage. Use these tips to start building your credit score back up today.
Check Your Credit Report Regularly
The first step to fixing your credit score is to find out what it is in the first place. Fortunately, you can easily get a free copy of your credit report online in just a matter of minutes. Once you get it, mark your calendar to check your report again regularly – once every four months is generally recommended. You can get a free copy from the three credit bureaus: Equifax, Experian and TransUnion.
When you get your credit report, don’t just note the number and toss it. It’s important to vet your credit report for errors each and every time you see it. Pay special attention to your payment history which, according to FICO, can account for 35% of your credit score. It’s also a good time to check for identity theft, which can really bring your scores down. If you do find an error, contact the credit-reporting agency immediately to get them corrected.
Ways That You Didn’t Know Improve Your Credit Score
Try To Get A Goodwill Adjust
Everyone makes mistakes and sometimes one missed or late payment can haunt you on your credit report for years. If you’ve had a late payment with a company, but have been a good customer with them other than that, you can simply ask them for a goodwill adjustment and erase the one late payment from your record. You have to submit this request in writing and there is a chance they’ll deny your request, but there’s not hurt in trying.
Be Careful About Co-Signing
This is more of a preemptive measure to protect your credit score than anything. You should always be cautious with who you’re co-signing a loan for. Although it may be hard to turn down a family member or a close friend when they ask you to co-sign, just remember that if they can’t make the payments on the loan, all the responsibility falls back on you. It’s in your best interest to just decline any requests from someone who asks for a co-sign.
(Also read: The Risks & Dangers Of Cosigning Specific Loans.)
Add Missing Accounts
When reviewing your credit report history, check to see which credit lines that are not included on your credit report. If you have a good standing with a company and they’re not listed on your credit report, you should contact the company and ask them to report your payment history with the credit bureaus. Some companies that you may want to try contacting are utility companies, wireless companies and cable providers.
Ask For A Credit Increase
This might make sense at first, but it does help improve your credit score. Lenders often look at your credit utilization ratio to see how you manage your available credit. For example, if you have $20,000 in available credit, but only have a $300 balance, you’re utilizing your credit very well. While paying off the $300 debt, simply call the bank and see if they can increase your credit limit. If they approve, not only will you get a high credit limit, but you’ll also be lowering your credit utilization ratio.
The Easy Ways To Build Up Your Credit Score
Strike A Balance With Credit
You may be advised to never get a credit card unless you absolutely need one. That’s good advice on some levels – you don’t have to carry a balance to have a good credit score. However, if your score has dropped and you don’t have a credit card, then getting one (or even two) can help you build those scores back up. Look for a card that reports to all the credit bureaus and then be diligent about using and paying off the card. You can carry a small balance on it, but don’t let your spending get out of control or you could see your credit scores drop even further.
One thing to keep in mind with credit cards is that you should never apply for too many within a short period of time. The more you apply for, the worse it looks, so only apply for the credit cards that you need and space out your applications.
Obviously, having too much debt can really hang over your head and keep you from boosting your credit score. That’s why it’s important to tackle your loans and any other debts responsibly and diligently.
However, one thing that people overlook is how much debt is on their credit card. Even if you pay off your card in full every month, having a lot charged on it at any point in time can be bad for your score. That’s because the balance could be reported any day, making it seem like you’re further in debt than you really are. To prevent this from happening, try to use less than 10% of your credit limit when possible (33% at most) and make regular payments throughout the month rather than one large payment at the end of the month. This utilization of your credit can account for 30% of your credit score, so don’t ignore it.
(Also read: Easy & Effective DIY Debt Reduction Plan.)
Keep Cards Active
You shouldn’t have credit cards that go unused. Even if you just make a small purchase every month or so, it shows that you’re using your credit responsibly. It’s actually better to do this and keep your mostly unused card open than to close the account. In fact, closing credit card accounts can bring your score down since it can reduce the total length of your credit history. So keep those accounts open for a long time and make sure they’re being utilized.
Your credit score doesn’t have to be a permanent obstacle. Though it may take a little time, sticking to the rules laid out here can help you score improve over time.