If you find yourself staring back at a less than attractive credit report and unsure what you can do to better your standing, then you’ve come to the right place.
While nothing is truer than the fact that building a good credit score is something that plays out over the longer run, that doesn’t mean you cannot impact it in the short run at all. On the contrary, there are a few things you can do to improve your credit score quickly. Here are 6 such ideas.
Open Several New Bank Accounts
This is known as building your credit profile. All new bank accounts are reported to the major credit bureaus (most lenders and card issuers report to all three), which makes it a good way to “mark your place” as a “good borrower” by having several open and active credit accounts.
You could also opt for credit-builder loans or secured cards if you are just starting out or have a particularly low score. If you already have a good score, you can choose a great rewards card that does not have an annual fee.
Don’t Miss Payments
Since your payment history is one of the most important things considered in the calculation of your credit report, you need to make sure that your bills are paid on time. A consistent history of on-time payments will help achieve and maintain a good credit score. Since payments are considered late if they go past 30 days from the collection date (and subsequently reported to the credit bureaus), you need to make sure you do not miss a loan or credit card payment by more than 29 days.
You can set up automatic bank transfers to ensure you do not miss any payment, but if you are unable to make the payment due to some hardship, you can request your card provider to give you an extension.
You need to make sure that your credit utilization is at 30% or less. Credit utilization is the portion of your credit limit that you’re using at any given time. It’s important to keep it as low as possible because credit utilization is the second thing that most impacts your credit score after payment history.
The best way to maintain a low credit utilization is to pay off your credit card bills in full every month. If that’s not possible, aim to pay off at least 70% of them, slowly increasing it to 90%. This will leave you with a 10% credit utilization, which will contribute a great deal towards improving your credit score.
Another thing you can do to quickly bring down your credit utilization is to request an increase in your credit limit. Most banks and credit card issuers even allow you to do that online!
If you have a number of outstanding debts which are having trouble keeping hold of, you could be drowning in bills and late payments. This is definitely one thing that adversely affects your credit score. In such an instance, you may consider getting a debt consolidation loan – a single loan that can help pay off all your other loans. This way, you only have to worry about one payment every month and if you manage to get a loan with a lower interest rate, you can pay off your debt much quicker.
If you face a similar dilemma with multiple credit card debts, you can do the same with a balance transfer credit card which can help consolidate all the balances in one place. Many such cards offer a promotional period of 0%, however, you will need to be vigilant about the 3-5% typically levied on balance transfers.
Check Your Credit Report for Errors
Did you know that about 25% of Americans find an error on their credit report? This is why it’s worth checking yours out to make sure there isn’t a discrepancy that could be negatively affecting your credit report. You can get a free credit report from any of the major credit bureaus.
Some errors you could find include fraudulent or duplicate accounts, or even misreported payments. If you do find any such errors, you can dispute them and have them removed, which instantly gives your credit report a boost.
Request Negative Entries Be Erased
If you had a series of late payments or an old collection account that has been paid off already but still shows up on your credit report, this is still going to affect your score negatively.
One thing you can do is to request that they be removed. This wouldn’t be easy, but it is definitely worth the time and effort on your part. Try speaking to the collections agency, debt buyer, or the original creditor to ask them to remove paid-off accounts from your credit report altogether instead of just showing them as paid. Doing so can have an even bigger impact on your credit score.